Lawyers in the 21st century, are no longer limited to court galleries, nor their acumen and approaches to real-life problems affected by digital technologies can be traditional. Today’s lawyers must act like consistent conflict managers, who would use their clarity of first principles in legal theory to provide real-time, stage-conscious, risk-sensitive solutions. A theory of law and economics, differing from the decades’ old Keynesian and Newtonian economic thought models, now calls for complex adaptivity in lawyering. In fact, when legacy institutions become either dysfunctional or overburdened, lawyering solutions to address legal problems related to digital products and services, would surely go beyond the usual ways of addressing liability and rule of law concerns. Even auditing and compliance, as simplified or complicated it may seem, shapes the regulatory approaches of governments and enables mobility in solving problems. In my previous articles, I have covered the concept of soft law in detail, in which I have discussed how understanding legal concepts and principles is not limited to the general sources of law. There are certain exhorting sources and means of understanding law, which indeed do not establish themselves to be, what we call as hard law. If we try to solidify those understandings and sources in the applied form, then those sources and means do not remain as soft law at all. It is necessary to recognise tools to mobilise legal solutions as the means and not the end. Following this principle, in this article, I will explain about agile management in law, and will cover how can we use this as a tool or a means to enhance lawyering in law & digital technologies. What is Agile Management/Methodology? In 2001, a group of individuals authored the Principles of Agile Methodology in which they proposed much modernised means of software development. The 12 principles are quite simple, described as follows: Deliver customer satisfaction by delivering valuable software continuously Always accept change of requirements matter how early or late in the project Deliver software that works within a shorter timescale Both developers and business professionals must work closely together daily throughout the project Information is best transferred between parties in face-to-face conversations Motivate people to build a project by creating an environment of appreciation, trust, and empowerment Working software is the key measure of progress The agile process promotes sustainable development Continuous attention to excellence and quality in technical development and design boosts the agility Simplicity is a vital part of effective agile management Self-organized teams produce the best architecture, requirements, and design Teams should reflect through inspection and adaption to be more effective When we understand these principles, it is necessary to realise that these principles are more indicative and reflective in creating sustainable legal solutions or at least those legal methodologies which are coherent with the agile development of digital technologies. Lawyers would largely have to ensure that from every possible and legally cognizable stage of technology development, they have to propose and provide handy solutions, which fit in the legal status quo, while the laws and regulations which cover digital technologies, really become handy enough to promote technological and legal innovation. We can also argue that the development of ethical principles for different kinds of digital technologies, may be attributed to the inspiration of these obvious 12 principles of agile management, which somehow reflect upon some crucial areas of technology development, such as: Knowledge Management Corporate Ethics Auditing and Compliance Examples of such technologies could range from artificial intelligence to IoT and even the emergent Web3 technologies, such as metaverse and blockchain. It would be reasonable to understand how to develop the skill of agile management and asking the right questions to develop strategic solutions to address digital transformation. Some General Know-hows of Agile Management There are no exhaustive or rigid approaches towards agile management. When we read those 12 principles of agile methodology in software/digital product development, we can understand that the applicative effect of these principles, does not have to be rigid. If we try to achieve rigid outcomes, then the sustainable essence of the principles has neither been understood, nor been achieved. Let me take a principle, as an example: Continuous attention to excellence and quality in technical development and design boosts the agility The above principle, describes the essence of giving continuous attention to achieve excellence and quality in two important things - technical development and technical design. For a technology lawyer, who has to advise and help the company developers - the principle gives indicates the following to reflect upon: If no regulation or law on a class of digital technology exists in general, then self-regulation backed by market economy concerns drive the ethics of auditing and compliance, naturally. It would be reasonable to help technology companies to do these: Shaping auditing and compliance standards for digital products and services provided Engaging on consultation to promote sensible life cycles of the digital products and services Checking and shaping ethical approaches behind the design and development of the required digital products and services If any law or regulation, which regulates a particular sector, is applicable to that class of digital technologies, then self-regulation and market concerns would have to be sensitive to the the laws and regulations applicable to the sector. It would be reasonable to help technology companies to do these: Adhering with and promoting auditing and compliance standards for digital products and services provided, in lieu of their impact on the particular sector Shaping separate ethical methodologies on the sector-wise impact of the digital products and services, maybe in terms of their usage, their market value, their capacities, their effectiveness or the risks associated The principle is quite obvious is simple, for sure. But its value and applicability differs largely as legal problems often become complicated. In India, many of the legal questions remain unsettled, which makes it probable to have a first principles approach in addressing the ethics, the physique and the jurisprudence behind enabling agile management. Therefore, the know-hows can be used to learn, achieve, generate and improve the practical knowledge required to provide legal, ethical and management solutions. Some of the ways that technology lawyers may adapt with to gather those know-hows are described: Develop the first principles, legal, ethical and even economical behind the scheme of product development Stakeholder consultation is necessary to gather expert opinions Testing, evaluation and improvements in a digital product’s life cycle must be done coherently Apply schematic methods of thinking and understanding the ethical and legal anomalies with respect to the digital product The know-hows learnt and achieved from these general means could contribute towards enabling compliant and even sustainable business practices in general. Knowledge Management Knowledge management, in general relates to regulating the knowledge and information pertaining to business practices of a company. Whatsoever knowledge and information collected, which is learnt and generated in a company would be subject to regulation by a company’s management. Agile management could help in improving knowledge management in simple ways. Scrum meetings are a good example to regulate knowledge and information, where team members when share insights can indicate the kind of knowledge generation actually happening, and the level of competitiveness in addressing product-related issues. Even Feature-driven Development could be helpful in achieving knowledge management practices. Corporate Ethics Agile practices surely resemble corporate governance practices in a company, exemplifying how key decisions are made, and how the management leadership within the company ensure reasonable HR, development, auditing, risk assessment and other domains of concern. An example of corporate ethics could be observed in the development process of a digital product into several parts so that they are developed in iterations. From Creating Legal Norms to Creating Legal Solutions Sebastian Hartmann in an article on Solution Managers for Professional Service Firms explains how professional service firms approach creating legal solutions. This diagram from the article creates a much clearer picture: Now, norm creation and method creation play an important role in self-regulation in the information age. Yet, the emanation of these concepts come from the traditional understanding of governance and law-making, which has a top-down human element to approach legal problems. In this chart above, if we look at the traditional segments, it is determinable that the focus has now shifted to creating legal solutions, where agile methodologies can be adapted. The human-to-technology semblance shapes the efficacy of digital technologies in providing professional legal solutions. The genesis of legal solutions does not necessarily lie in public policy per se, but in providing all-round collaboration-oriented solutions to generic problems associated with digital products, which includes scale, technology UI/UX, consumer acquisition, deliverability and other factors of importance. Maybe public policy could enable the role of governments and various other stakeholders, such as domain experts, sector experts and consumers. Actions create the imprint of self-regulation, while could also enable regulators to drive markets smoothly, which could be simple in application to happen. It also enables healthy stakeholder consultations, which for sure could have better impact per se. In further articles, the role of agile management would be covered regularly.

In this article, I have discussed about a recent trend being pushed by various marketing firms, law scholars and industry players about the interesting problems surrounding around this similar notion that intellectual property rights, which are granted to humans, governments, companies or any proper legal entity, can be granted to artificial intelligence systems and technologies. There may be some proper arguments in the favour of the proposition, in the fields of technology and jurisprudence. However, my view is that the evolution of the digital technologies such as AI (or even AI-integrated) which we exemplify, have still not been a part of that saturation to promote the possibility of granting such rights. This article can be considered as a counter-propositional article to begin on this question of recognition of IP rights of AI systems and technologies. The CEI and SOTP Classifications of ISAIL: A Quick Recap Let us take a quick recap on the article in which I had discussed about the legal status of artificial intelligence technologies. As per the classifications provided by the Indian Society of Artificial Intelligence and Law on entitative status of artificial intelligence technologies - there are 2 clear ways to do it - CEI and SOTP. As per this diagram, I had also proposed that the any AI technology/system can be manifestly present/available within any other class of technology in the tangible forms, that we understand. So, you might require machine learning tools, in a blockchain-based system, or maybe IOT and RFID tags used require the internal support of AI technologies for execution purposes. Sometimes, maybe even any class or sub-class of AI technology could exist within any class or sub-class of AI technology, if it is possible, in legitimate terms. Now, the idea of being manifestly available changes legal theory perspectives on deciphering what kinds of rights, privileges, liabilities and agencies can be accorded on any AI system/technology, since on a case to case basis, it is obvious to consider the situation becoming bleak or uncertain - because it could also lead any law professional to interpret such incidence in reductionist terms, heavily. Sometimes, technologies are embedded in certain ways as industrial trends shape up that disputes can still be addressed (keeping other factors aside for a while, if) in an ordinary fashion. Yet, in the field of judicial governance and alternate dispute resolution, especially in the technology law domain, it would be rather prudent to assume that complications may genuinely or obviously arise on the agency of any technology being put to use. This at least shows a simple phenomenon that unless proper trends are adapted with, sweeping generalisations on the status of AI technologies being recognised in legal systems, cannot be made. Dr Jeffrey Funk, a technology consultant (formerly at NUS Singapore) recently gave an intriguing example via a LinkedIn post, which is related to a prediction made by the University of Chicago that data and social scientists have developed an algorithm that forecasts crime by learning patterns in time and geographic locations from public data on violent and property crimes. However, the model predicts using historical data and does not predict specific events. Gary Smith writes for Mind Matters an article on the same issue, where he provides an informed critique on algorithmic criminology. An excerpt from the article is provided below: Algorithmic criminology is now widely used to set bail for people who are arrested, determine prison sentences for people who are convicted, and decide on parole for people who are in prison. Richard Berk is a professor of criminology and statistics at the University of Pennsylvania. One of his specialties is algorithmic criminology: “forecasts of criminal behavior and/or victimization using statistical/machine learning procedures.” He wrote that, “The approach is ‘black box’, for which no apologies are made,” and gives an alarming example: “If I could use sun spots or shoe size or the size of the wristband on their wrist, I would. If I give the algorithm enough predictors to get it started, it finds things that you wouldn’t anticipate.” Things we don’t anticipate are mostly things that don’t make sense, but happen to be coincidentally correlated. Now, in the field of AI Ethics, discussions have already shifted from attaining responsible AI (according imagined responsibilities on the AI system/technology and their creators) to explainable AI, where the questions revolve around the classic black box problem where algorithms lack explainability to human data subjects (if we take the GDPR lexicon, for example). This infographic clearly shows that in general, with exceptions, the responsible AI condition for any AI technology/system could be pre-emptive or ex-ante, to prevent any harm/damage to human data subjects (for example). In general, the explainability of AI technologies comes into question when it is a routined necessity to check them or when impact assessment has to be done. There are nuances in both the concepts’ materialisation, without any doubt. Let us now understand the problem behind even granting IP rights to AI technologies. The “Rights” of AI Technologies/Systems within IP Law It is a basic understanding that rights, duties, liabilities, facets of accountability and even agency of any tangible legal entity has to be decided on a clear and factual basis. Jurisprudence may be old, and it could be possible in the case of digital technologies that precedents might not even exist in many Global North and Global South countries. Nevertheless, sometimes the regulators intervene (AI policies, for example, India’s NITI Aayog’s Responsible AI Reports of 2020), legislative competence and approaches are sharpened (for example, European Commission’s draft proposal of the Artificial Intelligence Act) or the judicial bodies intervene and define some new principles or norms (for example, Commissioner of Patents v Thaler [2022] FCAFC 62, which is overturned as of now). Now, there are many general reasons why such soft or hard interventions are undertaken. Some of the reasons are outlined as follows: Some scholarly opinions by any judge or member of a regulatory/executive/legislative body could have contemporary relevance, and their groupthink could be taken into account to mobilise the process of policy formulation, acceptance and democratisation, from an industry point of view. In the field of law, it becomes necessary to start defining at least some basic aspects of a technology taken into scrutiny. Without any first principles, there is no possible to ensure accountability of the companies and creators who are benefiting the use of the technology as a subject matter. The European Union’s Artificial Intelligence Act (draft) in its Annex 1 provides a narrow definition of what constitutes artificial intelligence, for example. All states and their judicial and executive functionaries are the closest means to ensure that some relevant intervention or action is sought. For example, in India, the Delhi High Court has come up with important judgments on Twitter not adhering to The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which then (along with public comments) contributed discussions to review the 2021 Rules and notify amendments in the same. A general problem which emerges in the case of intellectual property law is that be it copyrights, trademarks, patents, industrial designs or even integrated circuits, it is duly important to signify at least some corollaries of what rights or duties or agency do we have to even accord to any artificial intelligence technology. The challenges are immense since much formalisation is not possible to happen unless the technology trends in the industry, globally and nationally, are stable. If companies are manufacturing AI technologies and systems which are weak on their explainability and during their cycle of making - their efficiency has even not been tested properly - there is no reason to provide any special legal faculties to AI technologies under IP law. For example, people can claim granting the rights of an inventor to an AI system, or claim that some AI software must be granted copyright for “making” some artistic work. The problem however is that the human touch to any creation, is something, which cannot be - replaced with algorithms-based anthropomorphism. This is similar to the case of the predictions made by researchers at the University of Chicago about an AI system predicting a crime even before its happening. AI hype is a serious problem because it shields the Black Box problem of AI systems and technologies. It also ensures in the market that the regulators fail to develop informed and sustainable rules and approaches to address the relevance and use of AI technologies, sector-wise. Cindy M Grimm provides an interesting example in an article published by Brookings Institution. We can illustrate this failure with a simple example. Let’s say the program manager requests a robot system that can see an apple and pick it up. The actual implementation is a camera that detects red pixels that form a rough circle. The robot uses two consecutive images to estimate the location of the apple, executes a path that moves the gripper to the apple, then closes the gripper fingers and lifts. When deployed, the robot mistakes the picture of a hot air balloon on a shirt and tries to drive the gripper through the person in an attempt to pick it up. This failure is not at all a surprise given the implementation description but would come as a shock to the person who was only told that the robot could “see apples and pick them up.” Many of the failures that seem to plague robots and AI systems are perfectly clear when described in terms of implementation details but seem inconceivably stupid when described using anthropomorphic language. The same case could easily apply to Creative Adversarial Networks (CANs), a subset of Generative Adversarial Networks. S Will Chambers, for Towards Data Science explains how CANs work: In the GAN, which the authors call a Creative Adversarial Network (CAN), a generator network creates images and a discriminator network, which is trained on 81,500 paintings, critiques the generated images based on aesthetics. Interestingly, when the CAN images were placed beside contemporary human artworks, human evaluators could not tell which images were artificially-generated. In many cases, the CAN images were rated aesthetically higher than the human artwork. Now, aesthetics has its own value, in philosophical and real terms. The reality however is that critiquing aesthetics does not ever mean possessing the tendency of creating something better. From a propositional aspect, using CANs to use generated images and develop aesthetically advanced or sophisticated “artwork”, might seem to be lucrative. However, mastering two skills - aestheticisation and critiquing human-made aesthetics can only have a human touch when humans are aware and doing it voluntarily. In the case of CANs, it seems that when algorithms anthropomorphise - there is no human touch or involvement. Human-made works, with their own mores, imagination, rules, biases and realities are left to algorithmic scrutiny, which again is not human-centric. Maybe, in certain aspects of artistic evaluations or creativity, those who are trained in CANs and GANs might use these algorithms as a project, or for any commercial and other use. However, granting any specific rights to an AI systems does not make sense. The right to critique even under a basic understanding of international human rights law, especially, Art. 19 of the International Convention of Civil and Political Rights (read with the UDHR of 1948) - is a freedom of expression right. Freedom of expression, be it under a libertarian understanding of rights - needs to have a human touch, because that system of understanding is definitive to protect human freedom of speech and expression against the excesses of a state. Let us assume that an AI system generates images using CANs, then why should it be even granted any IP rights? The Council of Europe, a premier multilateral body embracing global governance on issues of international human rights, under its former Ad Hoc Committee on Artificial Intelligence, recognised the human rights-centric aspect of artificial intelligence ethics. Emanating rights to human beings is sacred and fundamental, because human creativity, is truly, human. Algorithmic creativity is anthropomorphic and does not account to clear solutions and precedents. Here is a discussion I had with Gregor Strojin, the former Chair of the Ad hoc Committee on Artificial Intelligence for the Council of Europe months ago. For reference, I recommend readers to watch this discussion with Maksim Karliuk, at 14:31, on Human-centered Artificial Intelligence. Dr Richard Self has also provided strong arguments against the recognition of IP rights to AI systems and technologies. The arguments are provided as follows, with some elaborations: 1) As far as we know, AI systems do not have the ability to reason. All current LLM systems are pure stochastic parrots and even lack the ability to understand their "knowledge". It means that AI systems and technologies beyond even the questions of responsibility and explainability, have in general - not reached the ability to understand knowledge. Philosophically, it could be argued that the understanding has to be human-centric or maybe it could be anthropomorphised. The former seems to be a legitimate criterion and not the latter considering the harms of algorithmic anthropomorphism. If the latter option is chosen, for convenience reasons, then its life cycles must be regulated and tested with due dilligence. Knowledge management is delicate and within the domains of law and management, must be addressed reasonably, especially when technologies like artificial intelligence are the subject-matter. The Annex 1 of the EU’s Artificial Intelligence Act, is one of the most controversial and significant examples to look out for. 2) Any current form of "AI invention" is normally shown in systems that try many different solutions, such as genetic algorithms. This is not creativity, nor is it usually any form of reasoning. This argument makes sense because invention and creativity are not the same. There could be, in the human case, creative efforts behind generating or discovering something. Yet, it does not make a case for AI technologies and systems. 3) All current forms of AI are very narrow and cannot transfer knowledge between different domains. 4) Non-human entities, such as a software system also do not have any rights to real property and are owned by humans or institutions and businesses. As such, an AI system is just a tool that humans use to rapidly analyse different options. The resultant IP then rests with the natural human who posed the question and guided the tool towards a solution, or possibly, the IP is retained by the organisation for whom the person works. On point 3: AI can be categorised as Narrow, Weak and Strong AI as well. Measuring the “narrowness” of AI technologies can be done through many relevant methods - including quality and life cycle assessment, impact assessment, auditing, data quality, algorithmic explainability (the black box dilemma), due dilligence, etc. There has not been any AI technology ever found which can transfer knowledge from an X domain to a Y domain. This is a human skill, with human orientation, which again, has been formalised for years and centuries. This point surely is sensible. On point 4: Dr Self has pointed out the most complicated aspect of even granting IP rights to AI technologies: corporate governance & ethics. IP rights are used by legal entities and when companies (be it MSMEs, large corporations, start-ups) or any other possible legal entity owns the IP, can develop strategic knowledge resources for their internal and/or knowledge uses. Whether it becomes legally relevant for a regulator to intervene is a subjective question, as for different classes of AI technologies/systems, there are different multi and cross-industrial requirements. Specific cases, perhaps can be taken into regard to further unfold and study the phenomenon. Conclusion It is pertinent to note that the classes of AI technologies, and their manifest availability makes them further complex and uncertain (unless properly tested and documented) in terms of their legal/juristic status. If and only if IP rights are to be even granted to any such technologies, it should be the primary requirement of a State to define the legal and juristic entitative status of the class of AI technologies. The European Union’s approach to begin with the process is quite promising. How much sectorial that approach is, remains to be seen. Instead of asking hyped pop culture-inspired questions on the legal status of AI, it is necessary to study the contours of regulating AI technologies (their development, production, usage, auditing and impact assessment) and how corporate governance & knowledge management affects the strategic role and inclusion of AI technologies.

DISCLAIMER: The contents of this blog article reflect the personal views of the author alone and do not constitute the views of any of the author’s affiliated organizations. The contents of the blog article cannot be treated as legal advice under any circumstances. The use of smart contracts as opposed to paper based traditional contracts continues to increase in commercial activity and practice. With the advent of Web 3.0 technologies, smart contracts may become a standard form of contract since the characteristics of automated self- execution, operability on a decentralized blockchain and speedy execution of contractual obligations are more suitable to the needs of commercial transactions, and as well as for eliminating breaches in day- to day commercial transactions. However, the possibility of disputes exist in every contractual transaction and smart contracts are no exception to it. Considering that the regulation of smart contracts is at a nascent stage across jurisdictions, with India, having no legal framework at place, the idea of resolving smart contract disputes in a Civil Court is still implausible. But, at the same time, the possibility of solving smart contract disputes through arbitration is feasible due to the possibility of party autonomy in several crucial aspects such as choice in law, choice of forum, choice of procedure and the like, to be applied in the arbitration proceedings. Therefore, this blog attempts to examine the arbitrability of smart contract disputes in India with an aim to expose challenges and provide solutions in the current legal framework that may pave a path to better arbitrability of smart contract disputes in India. Understanding Smart Contracts A smart contract is an agreement between two or more parties in the form of computer codes which automatically executes either a portion or the entire contract between parties on the fulfilment of pre- determined parameters that have been added to the code. The execution of smart contracts happen on a blockchain network for which transaction fees referred to as “gas fees” are paid by the executing party. Since the idea of having smart contracts was to alleviate breach of contract, smart contracts are irreversible. In order to illustrate in a better way, a diagram with an example is being provided below: The diagram above showcases an example of a transaction of sale of goods by the manufacturer to the wholesaler using a smart contract. However, smart contracts in the practical sense tend to be more complex involving pre- determined parameters for aspects such as non- acceptance of delivery, delay in transportation, termination of contract and the like. Nature of Smart Contract Disputes Now that a basic idea of smart contract transactions along with an example has been discussed, it is important to discuss the nature and manner in which smart contract disputes may arise. Contrary to the general perception, although smart contracts self- execute on pre- determined parameters, the scope of breach of contract is quite high. Disputes may arise on account of error in the code leading to non- execution, change in law resulting in illegality of contract, defect in goods or deficiency in service and many more similar reasons. Due to this, it is necessary for an adequate dispute resolution mechanism to be used for resolving smart contract disputes. Arbitration is the most-suited dispute resolution method for smart contract disputes since blockchain arbitration as well as standard arbitration methods already exist and are being used in few jurisdictions to solve disputes arising out of smart contracts. On perusal of Diagram 2 above, it is easily inferable that blockchain arbitrations are conducted on the blockchain itself where adjudicators referred to as “jurors” arrive at a decision on the basis of majority voting and where the enforcement of the award takes place on the blockchain itself. The enforcement of the award on the blockchain itself is achieved by ensuring that the parties deposit an escrow amount on- chain. Blockchain arbitrations may not be legally recognized in several jurisdictions and are often viewed as reducing party autonomy and snatching the expert element away from arbitrations since majority voting by jurors is the criteria for reaching at a decision. Standard off- chain arbitration is the traditional arbitration process where the dispute is resolved before an Arbitration Tribunal (which can either be a physical or a virtual Arbitral Tribunal) by Arbitrator(s) appointed by the parties and the enforcement of the Arbitral Award is made by a Civil Court having jurisdiction. However, when it comes to smart contract disputes, even standard arbitration has its own set of issues such as the non- recognition of smart contracts as a valid contract in many jurisdictions and problems related to enforceability of an Arbitral Award solving a smart contract dispute. Identifying Legal Challenges from the Indian Perspective Essentials of Contract and the Consideration Conundrum In the Indian context, to determine the arbitrability of smart contract disputes, it is primarily necessary to examine if smart contracts can be treated as valid contracts. Section 10 of the Indian Contract Act, 1872 stipulates the essentials of a valid contract. On perusal of the Diagram above, it is easily understandable that the essentials of a valid contract under the Indian Contract Act, 1872 is that there must be parties competent to contract, a legitimate offer and acceptance, free consent of parties entering into the contract, lawful consideration, lawful object and the contract must not expressly be declared as void. In the Indian context, smart contracts can certainly have competent parties to contract, legitimate offer and acceptance, free consent of parties, lawful object and the contract would also not expressly be declared as void, but the challenge arises in the portion of meeting the requirement of lawful consideration. The colossal reason for the consideration involved in smart contract transactions not being treated as lawful is because of the use of cryptocurrency as consideration in smart contract transactions. Initially, the Reserve Bank of India had banned banks and financial institutions from dealing in cryptocurrencies, but this was subsequently reversed by the Supreme Court of India. Vide the Finance Act, 2022 direct tax on transfer of cryptocurrencies were introduced. However, this is more or less a temporary arrangement up till the introduction of the Central Bank Digital Currency which will impose a blanket ban on all other forms of cryptocurrencies and only legalize the Central Bank Digital Currency introduced by the Reserve Bank of India. For the present moment lack of express legalization of cryptocurrency in India exists but once the Central Bank Digital Currency is introduced, its use as consideration in smart contract transactions will be treated as “lawful consideration”. Until then, the consideration conundrum may continue because of manifold interpretations and lack of clarity. Impossibility of Stamping of Smart Contracts Under Indian law, there is an express requirement of every contract to be stamped as per the provisions of the Indian Stamp Act, 1899 read with the provisions of the State law for stamping enacted. Even though the Supreme Court of India has emphasized that although unstamped contracts are curable, but in the occasion of Arbitral Tribunals and Civil Courts coming across unstamped contracts, they have to impound such unstamped contracts and require parties to pay Stamp Duty. This may entirely be impossible in terms of smart contracts since smart contracts are executed on the blockchain itself and are intrinsically irreplicable, making them impossible for stamping as per the Indian Stamp Act, 1899 or as per the State stamping laws. Non-Recognition of Blockchain Arbitration Indian law does not recognize blockchain arbitrations because of the entire legal system having been created for accommodating dispute resolution of paper- based and written contracts. Furthermore, blockchain arbitrations may not involve oral hearings and may also not permit additional pleadings to be made, resulting in the violation of principles of natural justice. This is why, for the moment, the possibility of blockchain arbitration in the Indian context may be a far- fetched idea. Governing Law, Choice of Procedural Rules, Venue, Seat of Arbitration, Appointment and Qualifications of Arbitrators Traditional paper-based contracts and electronic contracts commonly have governing law, choice of procedural rules, venue of arbitration, legal seat of arbitration, appointment and qualification of arbitrators incorporated as a part of the contract itself. However, this may not be the case when it comes to smart contracts since parties may often opt for blockchain arbitration wherein the dispute is solved as well as enforced on the blockchain itself with the help of escrow deposit made at the time of initiation of the dispute and a voting “jury” system. In the Indian context, this may prove to be challenging since the entire mechanism of blockchain arbitration is not legally recognized. Power of Judicial Authority to Refer Parties to Arbitration Defeated on Procedural Ground Section 8 of the Arbitration and Conciliation Act, 1996 confers a judicial authority (including a Civil Court) to refer parties to arbitration where an application is made. However, a mandatory procedural condition imposed is that an original or duly certified copy of the arbitration agreement has to be furnished along with such application. This can prove to be an impediment when it comes to smart contracts since smart contracts are executed on the blockchain and intrinsically irreplicable and therefore, to be able to provide an original or duly certified copy of the arbitration agreement may not be possible unless and until an arbitration agreement was signed off-chain. Issues in Enforcement of Arbitration Award The above Diagram explicates the issues which currently exist in the enforcement of arbitration awards solving smart contract disputes in India. The first extant issue is that Article II of the New York Convention requires that a valid arbitration agreement needs to be in writing. Smart contracts can be in code as well as natural language form, but in case the smart contract is entirely in code, then it may not be treated as a valid arbitration agreement under the New York Convention. The second extant issue is that similarly, Section 7 of the Arbitration and Conciliation Act, 1996 also requires that an arbitration agreement needs to be in writing which may lead to non- recognition of smart contracts entirely in code. The third extant issue is that Section 47 of the Arbitration and Conciliation Act, 1996 requires that during enforcement of a foreign award, the original arbitration agreement or a duly certified copy of the original arbitration agreement has to be presented before the Civil Court. As pointed out, this is not possible in relation to smart contracts unless and until an arbitration agreement is entered into between the parties separately off- chain. The fourth extant issue is that in case an Arbitral Tribunal passes an Award directing certain remedial action to be taken on the blockchain itself, it is unclear if the Civil Court enforcing the Award has the power to order such remedial action to be undertaken on the blockchain to the blockchain network provider since the blockchain network provider is neither obligated by Indian law to do so, nor is the blockchain network provider a party to the smart contract. It is indeed true that the parties have to accept the terms and conditions (in the form of an electronic contract) of the blockchain network provider while availing their services, but that in itself would constitute a separate contract. Furthermore, Section 36 of the Arbitration and Conciliation Act, 1996 also stipulates that enforcement of Award has to be done as per the Code of Civil Procedure, 1908 as if it was a Decree passed by a Civil Court. For foreign awards, similar provisions exist under Sections 48 and 49 of the Arbitration and Conciliation Act, 1996. Due to these provisions, immense difficulty may arise for the portion of the Arbitration Award to be executed on- chain (on the blockchain) since there exists no mechanism permitting the enforcement of Award on the blockchain itself. Solving Legal Challenges in the Arbitrability of Smart Contract Disputes in India Now that several extant issues in the arbitrability of smart contract disputes have been discussed, it is necessary to solve such legal challenges under Indian law which are hampering the arbitrability of smart contract disputes in India. Due to the inherent nature and development of Indian jurisprudence, it may not be possible to legalize blockchain arbitration for the moment. However, this does not mean that parties in smart contract disputes should be left remediless. Therefore, this part of the article is dedicated towards explicating solutions and suggestions that can permit smart contract disputes to be solved under the current law of arbitration in India. Dealing with the Consideration Conundrum Section 23 of the Indian Contract Act, 1872 stipulates what considerations are lawful. In case a form of consideration is forbidden by law, by its nature defeats the provisions of any law, is fraudulent in nature, involves or implies injury to property or person of another or if it is deemed as immoral or opposed to public policy by a Court, then such form of consideration would be treated as unlawful. Cryptocurrency does not defeat the provisions of any existent Indian law, is not fraudulent in nature, does not imply injury to property or person of another and has not been deemed as immoral or opposed to public policy by a Court. Furthermore, for the moment, cryptocurrency is not expressly forbidden by law either, but it seems that Indian law is certainly heading towards that direction with the idea of the Central Bank Digital Currency. This would mean that in case parties enter into smart contracts with a choice of governing law as India, and the change in law forbidding cryptocurrencies except the Central Bank Digital Currency occurs, then parties would not be able to initiate arbitration since such contract would become void on account of illegal consideration under Section 23 read with Section 24 of the Indian Contract Act, 1872. Even if an arbitration is initiated and the change in law occurs after that, parties would still face tremendous difficulties in enforcing such arbitral awards since it would be challenged and may even be set- aside by Indian Courts for being in contravention to fundamental public policy of India under the Arbitration and Conciliation Act, 1996. Therefore, up till the introduction of the Central Bank Digital Currency (since the legalization of other forms of cryptocurrency seems to be highly unlikely) it would be on the more commercially viable side, for two Indian parties or even foreign parties with disputes in India arising out of smart contracts to choose a foreign seat of arbitration and a foreign governing law with a venue of arbitration as India in order to avoid any form of difficulties to initiating arbitrations or enforcing awards made for smart contract disputes. Solving the Issue of Stamping of Smart Contracts Since the provisions of the Indian Stamp Act, 1899 are based completely for traditional paper- based contracts, they are redundant when applied in the context of smart contracts. The need for solving the issue of stamping of smart contracts arises out of the fact that stamping entails the collection of Stamp Duty for the Government and would lead to Revenue loss in case robust provisions for stamping of smart contracts are not introduced. Furthermore, as pointed out above, the Supreme Court of India has laid down that Arbitral Tribunals and Civil Courts (during enforcement) are required to ensure that parties cure any defects of unstamped agreements by the payment of Stamp Duty and therefore, in spirit has affirmed the mandatory nature of stamping of contracts. Although the long-term goal should be to introduce a blockchain based stamping system, looking at the current ground realities, the Indian Government may be few years away from developing such a system. In order to ensure that stamping does not become an incurable defect for smart contracts, the e- stamping facility could come to the rescue. The buyer in the smart contract transaction or the seller (only if expressly agreed upon in the smart contract) can pay the necessary Stamp Duty using the e- stamping facility. However, in order for this to happen, the Indian Stamp Act, 1899 and its corresponding State stamping laws will have to specifically confer recognition of “instrument chargeable with duty” to smart contracts and also include them in the Schedule prescribing the Stamp Duty payable. Once this is done, the buyer or the seller (if specifically agreed upon in the contract) can pay the applicable Stamp Duty prescribed through the e- stamping facility. This way, even if it is found during arbitration proceedings or enforcement of award proceedings that Stamp Duty has not been paid, it will remain as a curable defect which can be rectified by the concerned parties. Solving Issues Pertaining to Governing Law, Choice of Procedural Rules, Venue, Seat of Arbitration, Appointment, Qualification of Arbitrators and Enforcement of Arbitration Awards As opposed to traditional paper- based contracts or even electronic contracts for that matter, aspects such as governing law, choice of procedural rules, venue, seat of arbitration, appointment of arbitrators and qualification of arbitrators may not be included in smart contracts as a matter of standard practice due to its reliance on blockchain arbitration that is not legally recognized in India. Considering that these aspects play a vital role in standard off- chain arbitrations, there are two ways in which parties to smart contracts can deal with the issue. The parties could opt to implement only the transactional portion through a smart contract code and have a natural language electronic contract or a natural language paper contract as an arbitration contract that will contain governing law, choice of procedural rules, venue of arbitration, seat of arbitration, appointment and qualification of arbitrators. This will enable parties to initiate arbitrations and enforce the arbitration award without any difficulty and parties can even freely choose between ad- hoc arbitrations or institutional arbitrations as per their requirements. Alternatively, the parties could include governing law, choice of procedural rules, venue of arbitration, seat of arbitration, appointment and qualification of arbitrators in the smart contract itself and permit the intervention of an Arbitral Tribunal acting as a blockchain oracle when a dispute arises. A blockchain oracle is an entity that connects the blockchain with external data sources allowing inputs and outputs from external sources to the blockchain as well as vice versa. In other words, it is the mechanism through which a blockchain can interact with external data sources. In order to explicate as to how an off- chain Arbitral Tribunal can act as a blockchain oracle, a diagram has been provided below: On perusal of the diagram above, the first step in the process of Arbitral Tribunal as a blockchain oracle is that the smart contract needs to be coded with predetermined parameters that would constitute a breach of contract. Without this, the possibility of automated initiation of arbitration would not be possible. This means the parties would have to agree in advance in respect of the factors that would constitute as a breach of contract. In case the breach of contract arises out of a technical issue in the blockchain itself or the smart contract, then the respective contracts of the parties with the blockchain network provider will have relevance and separate legal action will have to be taken by the aggrieved party against the blockchain network provider. The second step is that the notice for commencement of arbitration will have to be sent manually by the party initiating arbitration and this is extremely crucial since Section 21 of the Arbitration and Conciliation Act, 1996 stipulates that the commencement of arbitration would be deemed to be the date on which a Notice or request for arbitration is received by the responding party. However, since the provision begins with “unless otherwise agreed by the parties”, the parties can specifically agree that the date of commencement of arbitration should be the date on which the smart contract sends an automated email communication to the Arbitral institution or Arbitrators, as the case may be for appointment of an Arbitral Tribunal. Once the smart contract sends an automated email communication for constitution of the Arbitral Tribunal as per the number and qualifications of Arbitrators as agreed upon by the parties, the third step would be to conduct the arbitration proceedings off- chain as per the governing law, procedural rules at the seat and venue of arbitration agreed upon by the parties. Now, the pertinent question which would arise is what would be the ideal governing law, procedural rules, legal seat and venue of arbitration. Although there are no issues for parties to agree for the venue of arbitration in India, since Indian law is not completely equipped for arbitrating smart contract disputes, issues may arise for parties if they decide to choose Indian law as the governing law and India as the legal seat. More suitable governing laws and legal seats would be jurisdictions, who have at least some forms of legal recognition conferred to smart contracts. The United States of America, United Kingdom and Italy are jurisdictions which have laws in place for smart contracts and blockchain whereas jurisdictions such as Estonia and the United Arab Emirates seem to be moving towards such legal recognition. Parties could opt for the respective governing laws and legal seat based on their requirements and the intricacies of the impugned transactions. As far as procedural rules are concerned, the JAMS Rules Governing Disputes Arising Out of Smart Contracts and the United Kingdom Jurisdiction Taskforce Digital Dispute Resolution Rules are two of the most commonly known procedural rules for smart contract arbitrations. However, since the idea is to make Indian law a preferred legal seat and choice of law for parties to smart contract disputes, it is necessary that primarily, insertions in clause (3) of Section 7 of the Arbitration and Conciliation Act, 1996 have to be made. Under Section 7(3), a proviso could be added to state that natural language or even fully coded smart contracts should be treated as “agreements in writing” for better clarity. Furthermore, it is of utmost necessity that specific principal legislation on smart contracts is also legislated. A specific enactment for smart contracts is mainly necessary to ensure that Government authorities, Courts, Arbitral Tribunals and statutory auditors are able to seamlessly interact with the smart contracts on the blockchain network as oracles in order to carry out the verification of existence of smart contracts, to reduce the insurmountable difficulties to furnish smart contracts as evidence and also, to ensure that outcomes of disputes expressed in the form of Judgments, Decrees or Awards are reflected in the smart contract. Such principal legislation would also be necessary to assign legal definitions to terms such as “smart contract”, “blockchain” and the like. Introducing specific legislation for smart contracts would also help in solving the dilemma under Section 8 of the Arbitration and Conciliation Act, 1996 which mandatorily requires parties to furnish an original arbitration agreement or a duly certified copy of the arbitration agreement since then, a mechanism for Civil Courts to verify the existence of the smart contract would be made possible. Principal legislation on smart contracts would also have legislative competency since Entry 7 of the Concurrent List (List III) of Schedule VII of the Constitution of India stipulates concurrent powers of the Union of India as well as the States to legislate on matters pertaining to contracts including special form of contracts. Coming back to Diagram 5, the last part is where the Arbitration Award is passed by the Arbitral Tribunal and the portion of the outcome which cannot be enforced on the blockchain is enforced by a Civil Court as per Section 36 of the Arbitration and Conciliation Act, 1996 read with the provisions of the Code of Civil Procedure, 1908 and Sections 48 and 49 of the Arbitration and Conciliation Act, 1996 for foreign Awards. However, when a certain portion or the entire Award has to be executed on the blockchain itself through an inbound oracle, then the same Sections 36, 48 and 49 would create impediments since the express requirement is for enforcement to be done by a Civil Court. Therefore, in order to make Indian arbitration law compatible for smart contract disputes, it is necessary that provisions are introduced in the Arbitration and Conciliation Act, 1996 explicating enforcement of Awards on the blockchain alongside the standard route of enforcement through Civil Courts. Additionally, the requirements of furnishing the original arbitration agreement under Section 47 of the Arbitration and Conciliation Act, 1996 for enforcing a foreign award can also be solved by the principal legislation on smart contracts discussed earlier, coupled with necessary amendments to Sections 47 which will permit the Civil Court (in case of off- chain enforcement) to verify the existence of smart contract. Conclusion From the discussions made in the preceding paragraphs, it is manifestly clear that several qualms do exist in the arbitrability of smart contract disputes in India which can be eliminated by way of necessary insertions and amendments and as well as through introduction of specific principal legislation on smart contracts. However, till that time, in order for parties in smart contract disputes to not be rendered remediless, parties may choose to solve their disputes through arbitration choosing a legal seat and governing law of a jurisdiction with a recognized legal framework for smart contracts as discussed above, up till the time relevant changes are brought under Indian law to make smart contract disputes arbitrable in India.

Some legal concepts are general, while many are not general. The latter of the concepts are designed to shape the economic, administrative and sometimes, political priorities of the systems we live with. In this article, let us deconstruct the idea of “Soft law” to understand in basic terms, the ideation behind creating hybrid legal concepts and regulatory systems in the contemporary times we live in. The “Law” as Known Instead of getting on the usual understanding of legal theory, and its basics, from the positive law theory to other schools of thought, let us adopt a different method to look at “Law” as something different. When ideas are synthesised, solutions are manifested. In general, the process is not as oversimplified, self-explanatory and charted out as we assume it to be. Often it happens that legalising, in a positive or negative sense or maybe with an active/omissive intent, a plane of reference and incidence proliferates, multiplies and complicates/recalibrates with time. For example, the fundamental rules of contract jurisprudence, never change. Yet, as times have changed, the way contracts are understood, surely are not the same, even within a specific legal conundrum. Often the loopholes present and the binding value impugned upon the legal boundaries and extent defined in the documents, reflect the operability of such documents. This can even extend to key legal documents such as constitutions, statutes, rules, regulations, circulars, guidelines and ordinances. According to Prof. Roger Brownsword’s book “Law 3.0: Rules, Regulation and Technology“, the development of Law per se can be assessed, in a modern scheme of things, in 3 stages. An excerpt has been shared above to make a simple reflection. Law 1.0 (Coherentism): This generally implies the era of positive law where top-down approaches to law enforcement, administration and interpretation were existent. We can refer to the post-Industrial revolution times as well for a better context. Law 2.0(Regulatory-instrumentalist): The stage when Law 1.0 as we know, in fundamental terms, is disrupted due to technological interventions. Yet we see, that technology itself becomes a solution and we go into the times of regulatory-instrumentalism (in a generic sense). Although I can refer to the AI “age”, I would limit here by stating that the sophistication of technology development itself could shape our legal and administrative status quo, in as many effective ways possible. This is also the stage when the emergence of regulatory theory is clearly visible, in as many legal fields as possible. Law 3.0(Technocratic): This is the current stage, as of now, where public-private partnerships too shape the way regulators would act, and how laws would affect our day-to-day stakeholders. The potential of technology, regulators and the stakeholders creates the case of regulation, self-regulation, technology-oriented regulation and collaborative governance, together (there could be more or less similar means). Contrary to popular assertions that the US is a free market economy, the most sophisticated and important programmes, which were utilised by several MNCs and companies, are the gift of the United States Government’s agencies (internet for example). What is common to observe are the following: The significance of primary and secondary legal documents, which shape a polity per se, in terms of it being subject to constant change, is largely reduced by delegating their authoritative aspect, operationally, to rules, regulations, circulars and other kinds of by-laws. The role of regulatory theory becomes quite worth engaging and their proximity cum sensitivity to the incidents and circumstances related to the legal disputes or lacunae, is obviously going to be more. A new phenomenon becomes mainstream, which in the information age, has its own colors and forms: stakeholder-ism. It means that various non-state actors become important stakeholders with time in subtle ways, which include citizens, civil society, companies, start-ups and other relevant actors, for local, provincial, national, transnational, international and global settings as we know. These stakeholders have some subtle role in at least vouching to utilise the potential the proximate and sensitive purpose of regulators at the first place. The relevancy of such stakeholders, of course, has to hold some water, which is a long-term issue in the timeline of regulatory and collaborative governance. Even certain non-regulatory state actors gain relevance, and their approach and methods towards “public interest” are renewed with time, to seek clarity and optimisation towards achieving certain goals and maintaining the status quo, as we see. It depends if they affect the regulatory landscape. Yet, their role in shaping the economics behind the legal and administrative machineries, is intriguing. Let us imagine a few examples from the real world, in graphical terms to further understand the phenomenon. #1: RBI: Regulation & Accountability Bhargavi Zaveri discusses an important question on the Indian scenario, whether regulators require constitutional status in India or not. An excerpt from her article published in Business Standard explains quite much about regulatory theory per se. Securing the de jure and de facto is better achieved by asking for “fair contract terms” for these agencies under their governing law, aligning the incentives of the persons heading the regulatory agencies with public interest and requiring them to consistently explain their actions to the public. When an agency is required to explain its actions to the public or its representatives, it may seem like its independence is being compromised. On the contrary, transparency of conduct is one of the most effective ways of incentivising the agency to act in public interest. A classic example is that of the provisions built into the Reserve Bank of India Act in 2015, requiring the regular publication of the minutes of the monetary policy committee’s meetings, individual votes of each member and the requirement to explain to the government the failures in maintaining the inflation target. This is a powerful provision that simultaneously secures independence and accountability, as it would be hard to explain decisions and votes that do not align with public interest. #2: The EU Artificial Intelligence Act Thibault Schrepel weighs down on the EU Artificial Intelligence Act and explains the risk-related considerations involved for companies in the realm of regulation for Network Law Review. Like GDPR, the AI Act will apply to a large number of companies in Europe. There are two overinclusive conditions to fall within the scope of the regulation. First, the company must use an AI system such as defined by the European Commission. The definition of AI is very, very broad. AI includes machine learning systems, but also expert systems, “logic and knowledge-based approaches” and statistical calculations. Two, the company must operate in a risky sector such as defined in the regulation. The riskier the sector, the heavier the regulation. For example, companies operating in “high risk” areas such as health or education will have to submit their AI system to a national agency for validation, before the system is released, whenever it is modified, and every five years. #3: The Amendments to the IHR 2005 on Health Emergencies India, among a group of countries had supported the US-proposed amendments to the International Health Regulations, 2005 (especially Article 6 of the Regulations), with the condition that the right to reservation by states is accepted as an amendment as well. In the Committee A of the World Health Assembly, on the application of Article 6, the Article 62 of the regulations were amended. The objections by certain countries however to the US-proposed amendments stem from reshaping the World Health Organisation’s regulatory capacity per se, over the question of whether the over-centralisation of the WHO is a necessity or not. Dr Silvia Behrendt and Dr Amrei Müller review the amendments proposed by the United States of the International Health Regulations, 2005 for EJIL Talk!. This short review of the US proposals to amend the IHR would like to end with a call on members of the WHA to discuss and carefully consider the implications of the proposed amendments before endorsing and adopting them. Have technocratic, biomedical approaches, developed and implemented from the top down primarily through executive action, worked well in response to Covid-19, justifying a further extension and centralisation of global emergency powers at WHO? And, if WHO’s powers are extended in this way, is there a need to also answer the question quis custodiet ipsos custodes (who guards the guards?), and to thus set up mechanisms ensuring that WHO complies with its obligations under the IHR and its Constitution, as well as its responsibilities for human rights deriving from customary international human rights law? In these 3 different cases, of different magnitude, purpose and scope, we can observe how the subtleties of regulatory theory are tried and tested. Approaches and methods could be rigid, flexible or loose. Nevertheless, tried-and-tested subtleties sometimes might fail, or could work, practically. The transformation of regulatory theory globally, as a concept, is not to just pile up another set of bodies, but to rather innovate in shaping the legal and administrative apparatuses which affect our lives, in any way possible. There can be consequences not without context, of the laws and regulations we adopt and shape with time. Hence, as Hard Law (Law 1.0), the corpus of laws and regulations, shapes, the role of Soft Law becomes much important. The Technocracy of Soft Law Andrew T. Guzman and Timothy L. Meyer explain what Soft Law is in an article for Journal of Legal Analysis, Volume 2(1) [2010]: But to say that soft law rules are quasi-legal is simply to beg the question of what separates the quasi-legal from the nonlegal, on the one hand, and the legal, on the other hand. The discomfort of legal commentators with soft law stems in significant part from this ambiguity. Soft law is a residual category, defined in opposition to clearer categories rather than on its own terms. Thus, soft law is most commonly defined to include hortatory, rather than legally binding, obligations. The focus of this definition is usually on whether or not something that looks like a legal obligation in some ways (e.g., it is a written exchange of promises between states) nevertheless falls short of what is required to formally bind states. This definition, then, is a doctrinal one—things that fall short of international law are called soft law. […] In our view, for reasons that are explained more clearly later, soft law is best understood as a continuum, or spectrum, running between fully binding treaties and fully political positions. Viewed in this way, soft law is something that dims in importance as the commitments of states get weaker, eventually disappearing altogether. […] There are so many different forms of soft law that it is often more fruitful to think of it as a group of subjects, rather than a single one. Let us look at this reflection on Soft Law by Guzman and Meyer in graphical terms. Soft Law, according to this mind map representation, is a corpus of law, which is not so performative like laws. It does have a multi-disciplinary route of impact, and yet we can inspire from the same to shape our legal and administrative solutions, in any area, be it Alternative Dispute Resolution, International Law, and even Constitutional Policy. Soft Law has the potential to bring fields like economy, policy, environment sciences, technology, victimology, finance, data science and many other unbeknownst fields together with the legal field. It behaves like a Schrödinger’s Cat. To make things simple - In quantum mechanics, Schrödinger's cat is a “thought experiment that illustrates a paradox of quantum superposition. In the thought experiment, a hypothetical cat may be considered simultaneously both alive and dead as a result of its fate being linked to a random subatomic event that may or may not occur”. Similarly, Soft Law in reality, does not vanish or exist in absolute terms. It is a phenomenon where the repositories of legal thinking can always learn the best from the policy phenomenon, which are uncertain, unclear and hortatory. Lawmakers and courts can try to make Soft Law rigid, but the nuance always lies in the details. It is impossible to keep up with the rigidity, as Soft Law has to be fungible. Otherwise, the instrumentation which we call as “the” Soft Law, will automatically become a relic or existing part of the Hard Law conundrum, in the form of regulation mechanisms, laws, judgments or any other possible form. I will come up with more insights and analyses in future on various “kinds and forms” of Soft Law to further unpack the phenomenon in the language of graphics.

This is the first blog dedicated to the ideas my team and I developed at the Indian Society of Artificial Intelligence and Law in the last 2 years. Whenever we read “AI”, usually, this makes us think about sci-fi movies and robotics, and then the term artificial intelligence comes in the fray. Interestingly, we all know that artificial intelligence is not 1 technology but a family of technologies. What does this even mean? Now, let me show you a chart made by our team at ISAIL to understand, how to classify AI in its legal and industrial sense: You can view this chart, and find how scientific, legal and industrial classifications differ. Classification Of Artificial Intelligence For example, maybe, some legal aspects of facial recognition technology and unmanned aerial vehicles could be similar. I am not claiming there is a perfect alignment out there. Yet, these technologies in view of their purpose are completely different. So, even if they are like AI, in that pop culture sense, they still are different “species” of artificial intelligence. This is exactly how the idea came into being when my team at ISAIL and I were brainstorming on this issue. This can happen even with general technology systems, such as robots and analytics services. They might be considered like artificial intelligence, but their operational and manifesting value and purpose are completely different. Work robots in a factory which make things easier are not delivering real-time analytics insight and vice versa. Obviously you can mix or merge the features and have 1 system that might try to deliver both of these things. Still, that is very subjective and depends on each and every case, to decide. The ISAIL Classifications When the 2020 Handbook on AI and International Law came into being, I had proposed a 2-tier model on classifying artificial intelligence. I will now discuss the basis of the classification in brief and then explain how this classification can help us refine our legal understanding of not just AI technologies, but also other kinds of disruptive technologies. As the chart explains, there are two kinds of classifications: Concept, Entity and Industry (CEI) Subject, Object and Third Party (SOTP) The first classification has been depicted above, as how they work. As the word Concept is, many argue that AI is an abstract concept, and so it is important to keep ground open for subtle and important positions of policy intervention to redefine the legal understanding of technologies like artificial intelligence, since, like all disruptive technologies, AI is an ever-shaping technology. The word Entity has a special value in legal literature around the world. In legal terms, an entity may be implied to be a company, a natural person, an NGO or any other corpus, whose rights, duties, liabilities and responsibilities are possible to be defined, not just in principle, but also in the spirit of implementation. Generally, polities across the world provide two kinds of statuses - LEGAL and JURISTIC. Legal means that a law has been framed or a set of regulations have been adopted, which have given a clear-cut picture of how that thing will be reckoned in the legal system, and how will the State address that thing. Juristic means that the status is based on some un-codified intervention, maybe via a court order/judgment or the manner in which that thing has been interpreted by the administrative component of governments (bureaucrats). Here, any technology within the family of AI technologies, can be recognised legally, or given some ad hoc (specific) status. Sometimes, giving status not even equivalent to that of a human, a company or any other entity in that generic sense, is also considered giving some juristic status. Considering that AI technologies require proper auditing and policy interventions, the juristic status works sensibly well here. The Industry thing is quite simple. AI technologies differ for every industry’s needs, and as those needs are catered, the technology class becomes valuable for that industry. For example, algorithmic trading services cannot be used by a content creator to make AI-based animations. Similarly, facial recognition software, cannot do the work of voice recognition software literally. That itself is based on how classifications are made. Similarly, what facial recognition software can do for Instagram Reels or Tiktok, is not what the latter would do that exact way. Hence, based on a case-to-case use, this is a first principle understanding that industrial needs differentiate the classes of technologies within the artificial intelligence family. The second classification is also simple. That kind of classification is context-oriented. As per this excerpt, assume that X is a human being, Y is the “AI” system. Subject means that X, the human is being subjected to the environment of the AI system, in which it is sharing its data. Object means that the roles are reversed as Y, the AI system itself is subjected to the human environment, since the circumstances in which Y is being used, must be taken into fair account. Third Party is a case where Y acquires special features, which show that it has a sense of explainability and foresight as an AI system. Generally this is not a perfect scenario, but as an ideal case, we have kept it to analyse more developments in the world of technologies. This is a short graphic explainer of how AI can be classified. Now, there is a principle, which we use to classify. Feel free to read the 2020 Handbook on AI and International Law to know about that principle, in its Chapter 1.

In this article, I review a quite thought-provoking book authored by Balaji Srinivasan, the former CTO of Coinbase. This book, as proposes - is named as “The Network State”. Interested people can purchase or read the book for free. Now, I must say that the book is a propositional masterpiece, since it elucidates a wave of futurist thinking in pursuing international technology law, and the idea of sovereignty under this proposed construct of what Balaji calls a Network State. Let us decipher it by defining some ground rules. I will be deconstructing the basic, and not all advanced ideas, propositions and concepts of this book (I might do analyse those ideas in articles written later in time). I have used the method of testing the potential of the arguments and ideas discussed in the book, in the realms of law, international affairs and governance. This book review is a constructive cum imaginative take on the idea of what a Network State seems to be. I would like to express my hearty gratitude to Balaji’s revering of the Ramanujan Number. This excerpt from the first chapter, the Preamble, is rather powerful in its tone, and serene in its sensibilities: Why 1729? That’s the publisher of this work. It’s named after the Ramanujan number, which symbolizes for us the dark talent: all those people from the middle of nowhere, passed over by the establishment, with crazy-but-correct ideas, who could do great things if only given the opportunity. These are exactly the kinds of people who we expect will found startup societies and network states. The Idea: From a Nation-State to a Network State Now, anyone who has read pure international law or even jurisprudence could be aware of the idea of sovereignty. The word nation generally, in politics and law, refers to the idea of nationality, attributable to a human population. That national identity generally spans differently across places. In certain states, any one identity defines the nation, while in certain states, composite cultures and the conglomeration of various human identities shape the concept of a nation. Sometimes, a national identity is beyond all identities assumed or inherited by an individual/community. Even the concept of self-determination in international law, was produced considering the trends in the so-called rules-based international order as we know. Now, Balaji explains what is a nation-state, which anyone would be referring to the common and obvious features of a nation-state. If we remember the idea of a social contract, we know that a nation state is comprised of - (a) people; (b) territory; (c) government; and (d) sovereignty (or sovereign will). A country may state that it has all the first 3 components, and yet, in practical terms if it cannot exercise its so-called sovereignty, even under the Purposes and Principles of the Charter of the United Nations (assuming they aim a UN state membership) - perhaps it is not sovereign (in an ideal scenario). Although scholars and professionals of international law are aware that sovereignty has to be agreed upon by a set of countries. In some cases, maybe a single country’s recognition could have some value, if not absolute merit in the international legal system. This quite explains how we look at the international rules-based system. Now, Balaji explains the idea of a Network State by two definitions - one being simple, and the other being more descriptive, rather cryptic a little. Let us address both of the definitions. #1: The Simple Definition A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states. #2: The Complicated Definition A network state is a social network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition. The first definition (#1) is a simple explanation that an online community which mobilises for collective efforts, crowdfunding the territorial dispositions attached to the online community - across the world - is a network state. If we however look at the second definition (#2) - we get a larger and interesting picture of the idea, where Balaji tries to propose that this “online community” becomes a network having 2 important characteristics - a sense of moral innovation (which reminds me of the theological and epistemological roots of liberalism) and assuming some sort of consciousness, which is national (as we know, nation=people in obvious ways). The idea of in-person civility, from a management perspective, fascinates me a lot, because it could be related to the ethics that drives a network state. Now, if I try to relate this with my ideas on Soft Law, I can say that the idea of self-regulation and introspecting into the ethics and values which shape a Network State, has been given enough focus in the definition. Start-up Societies as Network States We are aware of the generic, neoliberal understanding of the moral and ethical basics behind the genesis of the culture of entrepreneurship. In fact, as the book suggests, a network state is a startup society, with a sense of moral innovation, national consciousness and in-person civility, driving a consensual government, which automatically, does not get the diplomatic recognition of a Network State. Balaji also introduces readers with the idea of network unions and archipelagos. He proposes that like startups take time, to become unicorns and then public companies, even startup societies will take time become a network state. On trust, national consciousness and in-person civility, this statement by Balaji is worth noticing: High trust in turn comes from alignment towards a collective purpose and a sense of national consciousness. In the next sections, I analyse the book’s basic ideas, esp. from Chapter 5 - from law, international affairs and governance perspectives. On International Law: Return of Terra Nullius and Terra Incognita This is an excerpt from the Chapter 5 of the book explaining how terra incognita and terra nullius return. Balaji gives a simple proposition that a Network State System assumes many things present on the internet, will eventually become invisible to other subnetworks. It means that the any subordinate component or thing, within the network itself, becomes invisible, eventually. That may be an ordinary tendency to see things, so it does makes real sense why terra incognita could return. The return of terra nullius is nevertheless, more interesting to look forward. Like in public international law, we assume unclaimed physical territories as terra nullius, in the case of even a network state, we can assume that there are so many unclaimed assets, items, identities and indicators, which he covers under the term called the “unclaimed digital territory”. My view is that terra incognita will only increase as more sophisticated technology infrastructure is built with time, which is not just protectionist, but also interventionist. In both of these strands of technology design thinking, if the idea of a Network State becomes a reality, it could be possible that this could go further deeper, in a spiral. As far as terra nullius is concerned, I have some doubts as to why should it work, because what assets become important, may or may not dilute as the internet and the cyberspace transforms with me. Discoveries and innovation has emerged from mere telecommunication devices to the unusual emergence of the internet of bodies (derived from the internet of things), for example. In both the cases, we will see how things are considered horizontal and vertical, subordinately, or insubordinately. The book covers some interesting aspects of economy, governance and control. For example, Balaji rightly points out how real-time national governments can sometimes act as digital governments. Examples range from censorship to geoblocking and access controls of applications like Google, Twitter and others as well, in some cases. As we anticipate the discussion of digital territories, let us ponder upon how the process of diplomatic recognition in a postulated fashion has been covered by the author, which fascinates me. Balaji explains what happens if a Network State in proposition does not have any diplomatic recognition. Here is excerpt from Chapter 5: Another excerpt however must be taken into context, from the same chapter, which is provided as follows: It is understandable that Balaji has taken a reasonable example of cryptography to justify and make his case for diplomatic recognition and other forms of crystallisation to a Network State. This seems to expand the potential of distributed ledger by according private keys to users having exclusive access to their private keys. The Network State in a Multipolar World Order Interestingly, the work even if could be assumed to be utopian to be futurist, has some roots in pragmatism and optimism. Balaji has covered interesting examples of global and Western history, and the present conditions. For example, here is an excerpt from the beginning of Chapter 3 where he explains three billion-people led capitals, which are assumed to be quite significant in power and influence: As the excerpt is self-explanatory, this kind of a characterisation, is a quite normal premise for any proponent to make per se. The one central aspect to all of these three groups or centres of power is that capitalism retains itself as the dominant economic ideology, in the matters of governance and human life. The author’s illustration of all the three examples, make genuine sense. The explanation, interestingly is available within the same chapter with 3 reasons stated, in this excerpt: The third reason is a quite generic one meaning that uncertainty always eclipses over realities of the present. The second reason, from a policy aspect, is eventful, based on the assumption that the US is on a decline, and thus, is event-centric, which might be a case to revisit how Network States can be achieved. And yet, the author comes up with a better reason - the first one - in which he relates to the statements given by India’s External Affairs Minister, Dr S Jaishankar. Balaji thus relates to the assumptions that Eurocentrism, the primal force of modernity and technological revolutions in these centuries, would not remain the same - and that those same forces of technology, are not under any state or empire’s monopoly, which is practically true. The author is trying to explain that while big powers, like China and the United States (earlier it was the Soviet Union and the US), aim to create the situation of bipolarity/unipolarity in the realpolitik, thereby affecting the system of international law and the rules-based order, multi-polarity is what countries, individuals and groups demand for, because they too, like the supporters of Pax Bitcoinica reasonably wish for. It helps various actors to assume their own volition to steer their world, in specifics and general, wherever they go, howsoever flawed it might be. I have also covered Balaji’s proposition of a non-aligned India-Israel partnership, which is cryptocurrency-centric, based on a Twitter thread from his account in the final section of this review. From a perspective of structural and liberal thinking, it seems that Balaji’s understanding of a Network State, is way refined that the ideals of the Westphalian era, and even of the times, when the United Nations was formed. As international law becomes digital, the perspective this book offers, is a treat to read, for law students & professionals and even the scholars of public policy. Here is an excerpt on the multipolar nature of the global order, explained by Dr S Jaishankar from his recent book, The India Way: Strategies for an Uncertain World (2021), Chapter 3: Final Comments and Some Ideas My final comments begin with analysing a Twitter Thread in which Balaji proposes a non-aligned way integrating BTC/Web3. This is the opening tweet for reference. Although, the non-aligned movement has largely shaped India’s international legal perspectives, we can see that Balaji explains why should India lead a decentralised approach to technology autonomy and sovereignty. Here is an excerpt from the thread to refer: Looking at the main components of this book (as I will be covering more perspectives in future articles), I must state that the book, is particularly, strong in its understanding, and has a much clear approach towards technology governance, and I wish that this work, and its legal ideas are scrutinised effectively. Ideas like integrating Linux with the Law of the Sea, itself, has its own waters to be tested in. They seem to be more adaptive, and cyclic, than being reductionist, which could, in reality, enrich the international law scholarship, beyond postmodern analyses. It would also help multilateral institutions gain some relevance, if we take the epistemic undertaking of the technology law theories related to startup societies and network states, in general.

As technology continues to advance at an unprecedented pace, the legal industry has been struggling to keep up. Lawyers and legal scholars have been grappling with how to address the legal and ethical issues arising from the use of emerging technologies such as artificial intelligence and blockchain. One potential solution is to integrate the taxonomies of law and coding. What exactly does that mean? Well, let's start with a taxonomy. In the context of law and coding, a taxonomy refers to the language and categories used to describe legal concepts and technological concepts, respectively. By integrating these two taxonomies, legal experts can better understand how technological systems function and how they can be regulated, while coders can better understand the legal and ethical implications of their work. For example, consider the use of artificial intelligence in the legal industry. AI systems can be used to analyze vast amounts of legal data, identify relevant case law, and even assist with legal drafting. However, these systems also raise a host of legal and ethical issues. For example, how can we ensure that AI systems are unbiased and do not perpetuate existing biases in the legal system? How can we ensure that AI systems do not violate privacy rights or other legal protections? By integrating the taxonomies of law and coding, legal experts can better understand the inner workings of AI systems and identify potential legal and ethical issues. Coders, in turn, can work to develop AI systems that are designed with these issues in mind, ensuring that they are compliant with applicable laws and regulations. Interestingly, there is a paper that addresses this aspect, introducing a programming language for legal documents. It is called Catala. "Catala: A Programming Language for Legal Documents" is a recent paper published on arXiv by Pierre-Louis Gottfrois and his colleagues. This paper discusses how Catala can help bridge the gap between legal and technical experts and provide a framework for creating legal applications that are more efficient and accurate. We all are aware that the text of the law is regarded as a set of rules and to turn that into the program, challenges were faced by legal professionals and developers when attempting to create legal applications. The legal language is complex and nuanced, making it difficult for non-experts to understand and apply it effectively. Additionally, the lack of standardization in legal language and the variations in a jurisdiction can cause further confusion. To address these challenges, the author introduces Catala, a programming language that is designed specifically for legal applications. The language is intended to be more accessible to legal professionals while still providing the flexibility and precision needed for technical development. As proposed, the language is designed to be human-readable, allowing legal professionals to write rules in a format that is familiar to them. The language also includes built-in features such as variables, functions, and logical operators to allow for more complex legal rules to be written. The authors argue that the use of Catala can help prevent errors and inconsistencies, which can have as it makes natural and easy to express the general case with an expectation that permeates statutory law. This article offers a critical evaluation of the paper's contribution to artificial intelligence governance. What is Catala? The paper "Catala: A Programming Language for the Law" proposes a new domain-specific programming language called Catala, which is specifically designed to handle legal text. The authors argue that traditional programming languages are often unsuitable for dealing with legal concepts and can lead to errors and inconsistencies in legal documents and software applications. Catala aims to address these issues by providing legal professionals with a tool that is easy to use, accurate, and reliable. The paper begins by outlining the challenges of working with legal text. The legal text is often complex and contains a large amount of jargon and technical language that can be difficult to understand. Furthermore, the legal text is subject to change over time, which can make it difficult to maintain software applications that rely on legal documents. These challenges make it difficult for legal professionals to create accurate and reliable software applications that rely on legal text. The authors then introduce Catala as a solution to these challenges. Catala is designed to be easy to learn and use, with a syntax that is similar to natural language. This makes it easier for legal professionals to write and understand code. The language also includes a number of features that are specifically designed to help reduce errors and improve the accuracy of legal documents. One of the key features of Catala is its ability to handle legal concepts such as time, events, and obligations. These concepts are often difficult to represent in traditional programming languages, which can lead to errors and inconsistencies in legal documents. Catala provides a number of features, such as natural language expressions, that make it easier to represent legal concepts accurately. Another important feature of Catala is its ability to handle legal uncertainty. Legal text often contains ambiguity and uncertainty, and traditional programming languages are not well-suited to handling these issues. Catala includes features that allow legal professionals to represent uncertainty in a clear and consistent way. Before going into the programming language we have to understand the structure and logic how the laws are written and the way they are written is very different from the control flow that we use in the programming language (Figure 1). As the law in a way it is written it frequently changes the meaning of the previous definitions and then re-interprets in a very complex way that is way beyond the control flow of any other programming language. The Purpose & Use of Catala The authors provide several examples of how Catala can be used. One example is the creation of legal chatbots. Chatbots are becoming increasingly popular in the legal industry, as they can help to provide legal advice and support to clients. However, creating chatbots that are accurate and reliable can be a challenge. Catala provides a framework for creating legal chatbots that are accurate, reliable, and easy to use. An example is from Section 121, US Internal Revenue Code (in Figure 2) which has to do with how much of the proceeds of the sale of a house are exempt from taxes the general structure is that the law enumerates the conditions under which this exclusion can be applied but then also follows it up with a number of conditions which either modify or nullify this exclusion. The point is that you cannot simply read the first paragraph of the law which specifies a straightforward dollar amount for the exclusion and understand the entirety of it. You have to read the entire statute because paragraphs further down will change the meaning of this paragraph and the conditions under which it is applicable. For example, the next paragraph in Figure 3 modifies this first paragraph in place and says that under certain conditions the exclusion can be more than what was specified in this first paragraph. Further paragraphs get more and more complicated into corner cases of exclusions and conditions and this is a very common pattern in the way laws are written in a way. Following this pattern of writing the general case first and then specifying all the special cases after that this kind of logic is called default logic. The variant that laws most commonly use is known as prioritized default logic where you have default values guarded by conditions and then a number of special cases. Let's take a look at the language itself. The very first thing we have to do is encode the things (refer Figure 3) before we get to the issue of how things are computed. If you take this tax law example in Figure 3, you may understand that we have to encode things like time periods with starting and ending dates. We also have to encode money in terms of the gains from the sale of that residence and then we have to encode certain conditions. At this point these are all just declarations (refer to Figure 4). This looks very verbose but that was an explicit design choice. Why? The syntax in Figure 4 was designed in close collaboration with lawyers and they preferred more verbose keywords which improved readability; for them it was very important that Catala is understandable for lawyers. Once we get past the declarations of things like time periods and amounts of money, the next two important concepts in Catala are scope and context. A scope roughly outlines the law's structure and the context tells us that various values are to be determined later depending on the exact context intuitively. Scope of any law or legal instrument can be thought of as functions and contexts can be thought of as parameters and local variables. The example of the law in Figure 5 shows how scope of a legal instrument is framed. This syntax explains the conditions that a single person needs to satisfy. To get this exemption the syntax mentions the requirements on ownership and requirements on usage. Also, if both of those requirements are satisfied then the requirements for this context are fulfilled. Looking at Figure 5, it seems we have an executable rendition of this part of the law if you provide the inputs which in this case are "gain from the sale of the property" and the "various time periods" of your occupation & residence. Catala's interpreter thus will compute the amount to be excluded from your income. Since, the interpreter takes on the task of doing a control flow analysis and assigning values to variables in the correct order, finding cycles would be an error because the law is not supposed to have cyclic reasoning. As the programming language is still being developed it is necessary that feedback analysis would help to improve the use case of the programming language. Now, below I have made a syntax based on the Section 54 of the Income Tax Act, 1961 (India), which is merely an attempt to make it executable inspired by the code related to the Section 121 of the US Internal Revenue Code of 1986. Further inspiration could be inferred to the resources I could find on GitHub. Let's understand how the syntax works. program Section54TaxDeduction; rule Section54DeductionApplies( property: ResidentialProperty, salePrice: Currency, purchasePrice: Currency, dateOfSale: Date, dateOfPurchase: Date ) { // Check if the property is a residential property require property.isResidentialProperty(); // Check if the property was held for more than 2 years require dateOfSale >= dateOfPurchase.addYears(2); // Calculate the capital gain on the sale of the property let capitalGain = salePrice - purchasePrice; // Check if the capital gain is greater than zero require capitalGain > 0; // Calculate the amount of deduction that can be claimed under Section 54 let deductionAmount = min(capitalGain, amountInvestedInNewProperty()); // Print the amount of deduction that can be claimed println("You can claim a deduction of " + deductionAmount + " under Section 54."); } function amountInvestedInNewProperty(): Currency { // Calculate the amount invested in a new residential property // This function should return the amount invested in the new property by the taxpayer // within the specified time limits as per Section 54 of the Income Tax Act // This can include the cost of the property, as well as expenses incurred on the transfer of property // For example, stamp duty, registration fees, legal fees, etc. return 0; } Now, this program defines a rule called "Section 54DeductionApplies" that takes in the necessary inputs for determining whether a taxpayer is eligible for a tax deduction under Section 54 of the Income Tax Act, 1961. The rule checks if the property is a residential property if it was held for more than 2 years, and if the capital gain on the sale of the property is greater than zero. If all conditions are satisfied, the program calculates the amount of deduction that can be claimed under Section 54 and prints the result. The program also defines a function called "amount Invested In New Property" that calculates the amount invested in a new residential property by the taxpayer within the specified time limits as per Section 54 of the Income Tax Act, 1961. This function should be implemented to return the correct amount invested by the taxpayer in a new property. Please note that this is just an example program, and it may need to be modified or extended to suit the specific requirements of a given situation. Additionally, it is important to consult with a qualified tax professional or legal expert to ensure compliance with all applicable laws and regulations. Figure 6 (that is Figure 16 from the main paper) shows some promising results from a user study undertaken among lawyers. The stats show that lawyers are able to understand the kind of code they were asked to read this code with much convenience. In fact, most of them said yes. They were also asked if they can associate the code to the meaning of the law. Again, most of them said yes. When they were asked if they could certify whether the code does exactly what the law says, the answers were kind of mixed. Yet, the authors hypothesized that it could be because these questions were put to a group of French lawyers whereas the law they had encoded was part of the US Tax Law regime. As a case study, the authors encoded all of the "byzantine French family benefits" in Catalan (the programming language) and provided a web interface. On top of it they were able to verify the output of the Catalan implementation against the official state-sponsored simulator and found no issues. However, they did find one discrepancy and that pointed to a bug in the official state-sponsored simulator which was later fixed. This was a quick look at this new programming language which is claimed to encode laws and the default logic that it is based on. Perhaps, the use of a language like Catala could be possible in a technical and procedure-oriented area like Taxation Law, which is why the Section 121 example is quite relatable. Concluding Review In conclusion, the paper does outline the benefits of using Catala. From a glance that I could have at the paper, this programme language certainly has the potential to reduce errors and inconsistencies in legal documents; it can also improve the accuracy and reliability of legal software applications. Furthermore, Catala can help to reduce the time and costs associated with creating and maintaining legal software applications. While Catala is still in its early stages of development, the authors believe that it has the potential to transform the way legal professionals work with legal text, which is appreciated. Perhaps, the paper could benefit from more critical evaluations of the potential limitations and challenges of using Catala in legal practice. For example, the paper does not address the potential difficulties in implementing Catala in legal practice, such as the need for legal professionals to learn a new programming language. Additionally, the paper does not provide an evaluation of the performance of Catala in real-world legal scenarios.

We are eager to release the Vidhitsa Law Institute's first technical report, on artificial intelligence hype and its legal-economic risks. Bhavana J Sekhar, Principal Researcher and Poulomi Chatterjee, Contributing Researcher have co-authored this report with me. In this work, we have addressed the issue of hype cycles caused by artificial intelligence technologies in detail. This report is an initial research contribution developed by the team of Vidhitsa Law Institute of Global and Technology Affairs (VLiGTA) as a part of the efforts in the Artificial Intelligence Resilience department. We have continued our work which we had started in the Indian Society of Artificial Intelligence and Law (ISAIL) since 2021, on formalising ethics research on the trend of Artificial Intelligence hype. In my discussions and consultations with Dr Jeffrey Funk, a former Faculty at the National University of Singapore, Bogdan Grigorescu, a tech industry expert and an ISAIL Alumnus and Dr Richard Self from the University of Derby, I realised that it is necessary to cater to encapsulate the scope and extent of Artificial Intelligence hype beyond competition policy and data privacy issues, which many developed countries in the D9 group of countries have already faced. Many technology companies inflate their valuations and use Artificial Intelligence to hype their products and services’ value. This however can be done by influencing stocks, distorting perceptions, misdirecting demand and credibility concerns and other methods as well. The key to the exploitative nature of AI hype as we know them is based on the interconnectedness of the information and digital economy and how minuscule economic and ethical innovations in AI as a technology, can be abused. Bhavana’s Market Analysis is succinct and focuses on the points of convergence and Poulomi’s evaluation of the ethics of Artificial Intelligence is appreciated. I express my special regards to Sanad Arora from the Vidhitsa Law Institute and Ayush Kumar Rathore from Indic Pacific’s Technology Team for their moral support. Some of the key aspects discussed in report are about the perpetuation of the hype cycles and their formalisation in the legal rubric for regulators. We have also focused with a soft law perception to address larger economic and technical issues and offered recommendations. Based on our research, we have formulated seven working conditions to determine artificial intelligence hype, which are based on a set of stages: Stage 1: Influence or Generation Determination An Artificial Intelligence hype cycle is perpetuated to influence or generate market perception in a real-time scenario such that a class of Artificial Intelligence technology as a product / service is used in a participatory or preparatory sense to influence or generate the hype cycle. Stage 2: Influencing or Generating Market Perceptions & Conditions The hype cycle may be continuous or erratic, but the real-time impact on market perceptions which affect the market of the product / services involving Artificial Intelligence technologies, as estimated from a standardised / regulatory / judicial / statutory point of view. The hype cycle may directly or indirectly perpetuate the course of specific anti-competitive practices. Beyond the real-time impact on market perceptions, the consecutive effects of the real-time impact may distort a limited set of related markets, provided that the specific anti-competitive practices are furthered in a distinct pattern. Stage 3: Uninformed or Disinformed Markets The features of the product / service subject to hype cycle are uninformed / disinformed to the market. It may be stated that misinforming the market may be construed as keeping the market just uninformed, except not in mutually exclusive cases. Stage 4: Misdirected Perceptions in the Information & Digital Economy The hype cycle may be used to distract the information economy by converting the state of being uninformed or disinformed into misdirected perception. This means that the hype cycle about a product or service may not clarify certain specifics and may cause the public or market players to distract their focus towards ancillary considerations, to comfortably ignore the fact that they have being uninformed or disinformed. Stage 5: Estimation of the Hype Cycle through Risk Determination In addition, even if preliminary clarifications or assessments are provided to the market, the lack of due diligence in determining the inexplicable features of the Artificial Intelligence technology in any form or means as a part of the product or service involves the assessment of the hype cycle with a risk-centric approach. Further interpretation and explanations have been provided in the report. Recommendations in this Report Companies must make it clear to the regulatory bodies on the investment and ethical design of the products and services which involve narrow AI and high-intensive AI technologies. Maintaining efficient knowledge management systems catering to IP issues is important. It is essential that the economic and ethical repercussions of the biproducts of knowledge management are addressed carefully due to the case that many Artificial Intelligence technologies still would remain inexplicable due to reasons including ethical ambiguity. If Artificial Intelligence technologies are included at any managerial level groups, departments and divisions, which also includes the board of directors for consultative, reliance or any other tangible cause, then regardless of their attribution to the knowledge management systems maintained by the company itself, including concerns on intellectual property, a risk-oriented practice of maintaining legitimate and viable transparency on issues around data protection & privacy and algorithmic activities & operations must be adopted. Regulators can adopt for self-regulatory directives or solutions. In case regulatory sandboxes are necessary to be used, there must be separate guidelines (since they are not products or services) for such kinds of technologies by virtue of their use case in the realm of corporate governance. The transboundary flow of data, based on some commonalities of ethical and quality assessment, can be agreed amongst various countries subject to their data localisation and quality policies. When it comes to Artificial Intelligence technologies, to reduce or detect the impact and aftermath of Artificial Intelligence hype cycles – governments must negotiate on agreeing for an ethical free flow of data and by mapping certain algorithmic activities & operations which affect public welfare on a case-to-case basis. We propose that the Working Conditions to Determine Artificial Intelligence Hype can be regarded in a consultative sense a framework to intermix competition policy and technology governance concerns, by various stakeholders. We are open to consultation, feedback and alternate opinions. We also propose that the Model Algorithmic Ethics Standards (MAES) to be put into use, so that some estimations, can be made at a preliminary level as regulatory sandboxes are subject to procurement. The Report is available here for purchase. Price: 200 INR

Today, the 2021 Handbook on AI and International Law was released by Hon’ble Justice JR Midha (Retd.). This release event was conducted by the Indian Society of Artificial Intelligence and Law. This handbook, co-edited by Manohar Samal MCIArb, me and others spanned 26 different international law domains where we tried to address how these global trends meet. It was discussed why India needs to build its own indigenous technology standards and how that can be achieved like it is being tried with the Digital India Act. It was a riveting panel with Bogdan Grigorescu, Ish Jain, FCIARb, FHKIArb, FMIArb, SFBiam, FPD, FAIADR, Akash Manwani and Sanad Arora. Thanks Aditya for co-hosting. The recording of the discussion is available here at https://www.youtube.com/watch?v=eQ2ZIJe7ZtY The books are available for purchase at https://rzp.io/l/8rK4mx3

This article is co-authored by Poulomi Chatterjee, Contributing Researcher at VLiGTA. Web 2.0 was a significant milestone in the evolution of the internet as it facilitated the rise of decentralized communication. However, Web 3.0 seeks to elevate decentralization to an unprecedented level by empowering end-users with greater control. The centralized nature of Web 2.0, which was dominated by large platforms and aggregators, meant that users had limited control over their data and interactions. In contrast, Web 3.0 leverages decentralized blockchains and smart contracts to create a permissionless system that gives users complete autonomy. Web 3.0 represents a new era of decentralized infrastructure that prioritizes privacy and empowers users to interact with each other directly. This is made possible by the principle of "programmable trust" enabled by smart contracts. The trust-lessness feature ensures that users can interact with one another without the need for intermediaries such as Google, Facebook, or Instagram. As a result, users can enjoy a greater level of security and privacy. The possibilities offered by Web 3.0 technologies are truly awe-inspiring. With our imagination and aspirations, we can envision a simulation space that offers unparalleled opportunities for visualizing data, exploring what-if scenarios, and making informed decisions. The potential of Web 3.0 is vast, and we can only begin to scratch the surface of what is possible. Ushering Possibilities of Web3 in Public Policy A perfectly woven strategy for availing the surface of Web 3.0 technologies will not only encourage the development of platforms and avenues for Indian businesses and entrepreneurs but will also lead to exponential growth for Indian commerce. This would be made easier particularly with the help of a regulatory sandbox system, which will monitor live testing of new Web3 goods or services in a supervised environment for the purpose of which regulators may permit some relaxations. In this regard, the Government of Telangana has already taken steps to include the possibility Web 3.0 and related technologies in its commercial space to help Indian startup owners working in this industry. As the commercial space of spatial technology involving technologies familiar with the features of Web 3.0 continues to develop, the lack of regulatory aspects keep on spiralling more and more crimes, especially in context of knowledge-based countries, such as the United States. The FTX Crypto Scandal is just one of the examples in this regard which particularly involve the advent of “cryptocurrency,” i.e., a type of Web 3.0 technology. So far, the following regulatory challenges have been discovered which need to be countered as soon as possible for allowing the full potential of Web 3.0 technologies. Ensuring Cyber Hygiene Spatial Commerce, under the purview of Web 3.0 technologies are particularly user-maintained spaces, wherein data privacy is arguably lacking. An example of this could be the fact that although initially Digital Wallets used to be anonymous, the tools existing today are getting better and better at attributing the wallet identities based on the transaction history. This is dangerous because once the border of anonymity ceases to exist, data privacy cannot be maintained. If this is the future of Spatial Commerce under the purview of Web 3.0 technologies, it is possible that the aforementioned user-maintained spaces may experience a fallout due to the increased potential of data breaches and unsolved cybersecurity issues. Thus, in order to make such user-maintained spaces mainstream in Spatial Commerce, we must be able to implement proper cyber hygiene protocols for the purposes of protecting the users’ data and maintaining the veil of privacy along with anonymity. Cryptocurrency as Legal Tender Cryptocurrency, is yet, the only technology that has surfaced amongst the public as an innovative solution that can help solve complex issues in today’s regulatory market, under the purview of Web 3.0 technologies. Moreover, it is even being proposed that cryptocurrency be used as legal tender in order to create a decentralised, permissionless system operating with the help of trust. However, one of the main challenges in this regard is the lack of proper regulatory mechanisms to control the overarching effects of cryptocurrency. Jurisdictional Issues One of the biggest features of Web 3.0 technologies is the decentralised nature of regulation, rather than a centralised one, which imposes sanctions through an overseeing body in case of omission of a consideration. When the Internet was introduced, the governments across the globe faced similar jurisdictional concerns, since the Internet did not form part of the exclusive jurisdiction of any particular regulatory body. Thus, with the advent of Web 3.0 technologies that promote decentralisation and a permissionless system, governments across the globe have had difficulty in finding the appropriate means to make such Spatial Commerce spaces safe for consumers and end-users. Intrusive Nature of ICETs The intrusiveness of emerging digital technologies included under the purview of Web 3.0 that have the capability of putting the State's sovereignty to the test, misusing consumer data, attached privacy concerns, the spread of false narratives, as well as any other bias in the algorithms that could influence unfair means of transactions are only some of the problems that policymakers may need to think about when trying to make Web 3.0 technologies applicable in the existing space. Enforceability of Smart Contracts One of the biggest challenges with regard to making Web 3.0 technologies appropriately applicable is the enforceability factor of smart contracts. Since smart contracts are not yet legally enforceable, it limits the potential for adapting to the Web 3.0, by limiting the role of heavily regulated entities, and thus limits the ability to develop expansively. Ensuring Consumer Protection and Security As mentioned previously in the article, ensuring consumer protection and security to the data of such consumers and end-users is an extremely big factor in being able to decide whether the technologies brought forth under the purview of Web 3.0 will be adopted en masse or not. Amongst the plethora of Ponzi schemes happening across the world, Cryptocurrency, one of the products of Web 3.0 technologies, is one of the sectors wherein scams are frequenting. This not only increases the chances of money laundering schemes, but also poses as a bad sector to invest in, especially since enough consumer protection is not provided. While the potential of Web 3.0 is undoubtedly immense, it is important to acknowledge the current limitations and challenges. Decentralized systems are still in their early stages, and as a result, there are concerns about scalability, interoperability, and user adoption. These issues are particularly pressing as Web 3.0 seeks to challenge the dominant centralized models of the internet. Furthermore, it is essential to distinguish between the hype surrounding Web 3.0 and the actual capabilities of the technology. While the promises of complete decentralization and user autonomy are enticing, they are not yet fully realized. It is crucial to approach Web 3.0 with a critical eye and to recognize that the technology is still evolving. In fact, it is true that certain aspects of Web3 technologies are being adopted while the technologies as a whole are not yet fully realized. This is due to the fact that the development of Web3 technologies is still in its early stages, and there are many challenges to be addressed before they can be adopted on a larger scale. Additionally, there is a significant amount of hype surrounding Web3 technologies, which can lead to unrealistic expectations. A rules-based system that embraces accountability for using Web3 products, systems and services may be emphasized for letting the full potential of Web 3.0 technologies to be unlocked. This is especially true in the context of the 2021 NASSCOM Industry report on Cryptotech, which estimated that more than 800,000 jobs may be generated by 2030 in the Indian Web3 Industry alone. Thus, in order to avoid the vacuum of regulatory policies leading to outflow of capital from the country, we must cement the regulatory loopholes in this conundrum of a spatial commerce. Spatial Commerce is an example of a project that is using certain aspects of Web3 technologies while not fully utilizing them. Spatial Commerce refers to the use of virtual and augmented reality to create immersive shopping experiences. While Spatial Commerce is using some aspects of Web3 technologies such as decentralized marketplaces and cryptocurrencies, it is not fully leveraging the decentralized nature of Web3. Additionally, there are still many technical and usability challenges that need to be addressed before Spatial Commerce can become mainstream. In this article, we discuss the legal and regulatory aspects of Spatial Commerce Projects. What is Spatial Commerce? Spatial Commerce refers to the use of virtual and augmented reality to create immersive shopping experiences. From a legal perspective, Spatial Commerce raises a number of issues related to intellectual property, data privacy, and consumer protection. One of the key legal issues in Spatial Commerce is intellectual property. Virtual and augmented reality environments require the creation and use of digital assets, including 3D models, textures, and animations. As such, there is a need to ensure that these assets are properly protected by copyright, trademark, and other intellectual property laws. Additionally, there may be issues related to the ownership of virtual property and the use of real-world trademarks and logos within virtual environments. Data privacy is another important legal consideration in Spatial Commerce. Virtual and augmented reality experiences may require the collection and processing of personal data, including location data, biometric data, and user preferences. As such, there is a need to ensure that appropriate data protection measures are in place, including obtaining user consent, providing adequate notice, and implementing appropriate security measures. Finally, consumer protection is a key legal consideration in Spatial Commerce. Virtual and augmented reality experiences may involve the purchase of virtual goods or services, which may not be subject to the same consumer protection laws as physical goods and services. Additionally, there may be issues related to product safety, misleading advertising, and unfair commercial practices. Now, in Spatial Commerce, transactions and business relationships can be formed in a variety of ways, depending on the specific application and platform being used. Here's an example of how transactions and business relationships might be formed in a virtual reality (VR) shopping experience: Let's say a consumer is browsing a VR shopping experience for a new pair of shoes. They find a pair they like and want to purchase. To make the purchase, the consumer selects the shoes and initiates the transaction through a digital interface within the VR experience. The transaction is processed using a cryptocurrency or other digital payment method. At the same time, the VR shopping experience may use smart contracts to establish business relationships between the consumer, the seller, and any third-party intermediaries involved in the transaction. For example, a smart contract might be used to automatically transfer the payment to the seller once the consumer confirms receipt of the shoes. In addition, the VR shopping experience may use data analytics and machine learning algorithms to personalize the shopping experience for the consumer. This could include recommendations for other products the consumer may be interested in, based on their browsing and purchase history within the VR experience. In Figure 1, the example is presented as visualised. Now, the main selling point of Spatial Commerce is the virtual experience of understanding the products and services offered. This may very well work in frugal industry sectors like shopping, gaming, entertainment & arts, FMCG, influencer marketing, cosmetics, furniture, etc. These are still few sectors but there could be a lot of such frugal areas where using virtual reality (VR) or extended reality (XR) could be a game-changing effort. Like in the case of Generative AI, there are some genuine solutions, more into art, visual and audio and not many in text-based large language models; it could be limitedly safe to state that Spatial Commerce is a much better way to see how Metaverse could really work. The Metaverse was always overhyped. However, encouraging digital interactions which Mark Zuckerberg calls as "embodied internet" must mean something in real life. Why these interactions matter is always the point, which even regulators should necessarily ask. Where Regulation Begins in Spatial Commerce Unlike the case of Virtual Digital Assets, whose regulation would begin with a restrictive overtone, Spatial Commerce could be observed to estimate its impact in advertising, marketing, consumer ethics, intellectual property and product liability issues. In a generic fashion, if we are not mixing technologies like artificial intelligence here in a sense that it disrupts something in ordinary course of impact that demands legal recourse, then there are two aspects which could be taken as starter points in all the fields stated. Spatial Commerce could be considered a Web3 achievement, but in reality it still exists in the Web2 framework and can easily be regulated in a positive and flexible sense. Now, the two aspects that could make Spatial Commerce interesting to estimate are - (1) Use of Spatial Commerce as a generic tool whose digital interface is familiar to consumers in a normal sense; and (2) the Digital Interface of Spatial Commerce by design is regularly unfamiliar. Now, case 1 is easy to understand and there is no doubt about that. In Case 2, one can understand that there are certain use cases which are tested and presented. These use cases could involve the use of other classes of disruptive technologies, in physical, digital or any forms (considering that metaverse is not the default here). Questions related to human autonomy and consumer choices will come in future and there is no doubt that the environmental costs of Spatial Commerce would be taken on radar. One more interesting aspect, that may turn up is how jurisdictional concerns may rise on digital connectivity and transnational engagement. Although there is no need to have a restrictive approach towards this - it is better to analyse relevant trends and estimate how would Spatial Commerce be put into use. For sure, how would platforming and holding an intermediary status for e-commerce platforms may also come in if necessary, in case - hypothetically, Spatial Commerce goes the Social Media or Recommendation Media way, thereby becoming social spatial commerce.

Advancing technology and a growing trend towards peer-to-peer transactions facilitated by online platforms has ushered a revolution in the field of digital payments. Even the Central Banks want to exploit these new technological developments and are investigating the technology of ‘Central Bank Digital Currency (CBDC)’ to use it as a medium to not only proliferate the space of digital payments but also make it accessible to the public at large and expedite the payments and settlements mechanism for retail and wholesale payments. More than 60 Central Banks are researching on the use of CBDC’s in their economy, with countries like China, Sweden, Canada and the U.K launching pilot projects.[1] But astonishingly, it is the smaller countries such as the Caribbean, Bahamas and Cambodia which are leading the charge on CBDC’s with live projects such as Bahamas Sand Dollar, Bakong Cambodia, and Eastern Caribbean DCash[2]. Taking into consideration, the rising consensus towards the use of CBDC’s for advancing the economy, even the RBI is exploring the use of CBDC’s, and has already started working on a pilot project, with plans to launch its own CBDC by the end of 2022[3]. Amidst all these developments, it is imperative that we don’t stay blindsided to the potential pathbreaking impact CBDC’s can have on the functioning of the payments and settlements system and the economy. Through this article, the author makes an attempt to apprise the readers of the fundamentals of the technology and partake in an analysis discussing its pros and cons. Before delving into further analysis, it is crucial to note that CBDC’s should certainly not be mistaken for cryptocurrency, at the risk of sounding reductionist, CBDC in very simple terms is just fiat currency but in a digital form. The RBI defines CBDC as “legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency” (Reserve Bank of India, 2021). Despite being considered as ‘legal tender’ and equivalent of fiat currency the digital nature of CBDC allows it to hone characteristics specific to the function it has to perform, hence the purpose for which CBDC is being issued will have a great influence on its design. Possible iterations of CBDC’s Since CBDC’s are essentially a form of programmable currency, there are a lot of customisations which the issuer can make to alter its characteristics, such as: They can be token based or account based. A token based CBDC can be formulated on a centralised blockchain with the Central Bank as its regulator, which would operate via a public private key mechanism. On the other hand, an account based CBDC is similar to the current account-based model with respect to physical currency and would essentially require a banking relationship with the CBDC holder and the bank, where each transaction is debited or credited through the account(Fernández de lis & Gouveia, 2019 ). They can be made universal via the system of token-based currencies or private via the system of private currencies (Fernández de lis & Gouveia, 2019 ). They can be anonymous (like cash) or identified (like current accounts). The first corresponds to the idea of token-based CBDCs, and the second to account-based CBDCs (Fernández de lis & Gouveia, 2019). They can be programmed to pay interest at the option of the issuer, which essentially translates to interest being enabled as a feature on such currencies (Fernández de lis & Gouveia, 2019). From the various possible customisations of CBDC’s, there are three basic objectives which can be culled out, acting as the basis for issuing of it: (i) to improve the working of wholesale payment systems; (ii) to enhance the instruments available for monetary policy (iii) to innovate new methods of monetary policy and quantitative easing during financial crisis. However, the conundrum with respect to achieving each of these goals is that every individual goal requires us to create a CBDC with different characteristics, which would be interacting with different categories of individuals/institutions and thus have different levels of market and technological penetration. To cut it short, there are a lot of variables which have to be considered for designing a CBDC which results in added complexity. For better understanding of the readers, the author has made an attempt to conceptualise the CBDC which can be issued to achieve the aforesaid said goals, herein below: (i) If the objective is to improve the functioning of wholesale payment systems, it can be argued that Digital Ledger Technology (DLT) can provide an excellent basis for such CBDC’s. First of all, since we are just referring to wholesale payments, we can have a DLT platform which is just restricted to banks, financial institutions, and large corporations [4]. The best suited CBDC for such transactions would have to be tokenised, identifiable and restricted. It can or cannot be interest bearing depending on the contractual obligations between the parties involved in wholesale payments. It will be tokenised because it is based on a DLT and coupled with a public/ private key system along with a consensus mechanism programmed into that ledger to authenticate transactions. This way the Central Bank would have not have to waste any of its human resources completing compliances to affect those transactions because such work would have then been automated owing to the transaction happening on a DLT and a rigid consensus mechanism. The only role of the Central Bank would be to act as an intermediary with secure IT systems put in place ensuring smooth transactions. The role of the Central Bank would be similar to that in traditional RTGS or NEFT transactions, where it is placed at the fulcrum of the system hence it will retain control over the entire transaction including features of the system, like admission, membership and due diligence. (ii) If the aim is to replace cash with a more efficient means of payment, the Central Bank should introduce a CBDC that is universally available – a public Distributed Ledger can be set to manage the payments and settlement of CBDC or the existing account-based infrastructure of commercial banks could be utilised where the CBDC can be directly transferred to the account of the individual. Tracking of transactions through CBDC’s poses major data privacy concerns to remedy these concerns the low cost transactions can be kept anonymous, this would reduce the compliance burden of data collection on the Central bank and a threshold can be decided upon by the Central Bank beyond such transactions would be monitored (Mancini-Gri§oli et al., 2018). Such a CBDC would aid in cutting major costs which the government has to incur to sustain the system of physical currency such as - the logistics of digital currency would come at a fraction of a cost, compared to that of physical currency, investment in setting up the requisite infrastructure for manufacturing and transportation of physical cash would be saved, the digital currency deteriorate over time, and won’t be vulnerable to falsifications if the requisite technological safeguards are implemented. iii) If a CBDC has to be made to innovate new methods of monetary policy and quantitative easing during financial crisis, the three must have characteristics for it would be universality of transaction, identifiability, ability to bear interest. It has to be traceable because this way the Central Bank would be able to track the amount of money which is being transacted. It would have to be non-interest bearing or bear a negative interest rate because we don’t want people to hoard cash. Hence, during times of financial crisis to flush money into the economy instead of issuing cash to the people which they might hoard or invest in some savings oriented, we can give them essentially provide them with CBDC’s which won’t bear any interest the public would have no other option but to spend it and increase the flow of money into the economy. This enhances the level of flexibility the Central Bank has when deciding upon quantitative easing policies because issuing of CBDC’s delinks credit and the payments mechanism. The Impetus For Issuing CBDC’s As enumerated in the earlier section CBDC can be tailored to meet unique requirements and essentially offer more functionality than traditional ‘cash’ in that regard. However, it is not just the versatility of the CBDC which is encouraging the Central Banks to adopt a digital alternative to paper and such shift can actually be argued to be motivated by concerns like potential influence of privately issued digital currencies, international trade and currency dominance. Privately Issued Digital Currencies The advent and growth of cryptocurrencies has posed a major dilemma in front of the Central Banks that whether privately issued currencies can offer competition to fiat currencies. Since most of the privately issued currencies don’t have a derivative asset from which they derive their value, thus they are vulnerable to price fluctuations based on their perceived future value by the market which makes them extremely volatile. However, what they lack as a store of value they lack as a store of value they compensate for with features like peer-to-peer cross border transfer, automated verification and settlement mechanism, the ability to have smart contracts encoded on them (Brunnermeier, James, Landau, 2019). All of this leads to the cryptocurrency having a reliable digital network which fosters the trust of their users in them, affecting their demand and supply which in turn determines their price. The idea of having these private currencies to gain popularity and permeate into a sovereign economy and conducting their own ‘monetary policy’ is what threatens Central Banks (Brunnermeier, James, Landau, 2019). Like every private entity, they would conduct their ‘monetary policy’ to suit their own private interests rather than public and the Central Bank would not be able to effect its own monetary policy through such currencies which could be disastrous for an economy. Moreover, the entities who are transacting in such private currencies would then completely be at the behest of such unregulated private issuers. Hence the money which has been denominated in such private currencies would not have any form of protection and be completely dependent upon market forces. In addition to their immunity from the monetary policies of the Central Bank, if such currencies were to fail, they would have negative systemic effects on the economy of that country which it might not be able to manage. Digital Dollarisation Digital dollarisation is the idea that once a CBDC gains sufficient international consensus it will become the dominant mode of transaction in which international trade will be conducted, thus becoming the de facto medium of exchange (Agur, et al., 2019). By building international digital networks a CBDC can internationalise itself and thus strengthen the CBDC’s and by extension the fiat currency’s function becoming global store of value and attain full capital account convertibility which in layman terms means that the individuals using the CBDC for international transactions could easily convert it into local currency without facing any restrictions (Agur, et al., 2019). Thus, countries with smaller or underdeveloped economies or even countries with stable economies for that matter are susceptible to the risk of digital dollarisation. If a country with large digital networks were to penetrate the market of such countries through its CBDC (owing to the virtues of global store of value and full capital account convertibility and seamless peer to peer transaction), the citizens of that country would also prefer transacting in that CBDC instead of their native currency. This would incidentally translate to the native currency becoming weaker in relation to CBDC. Important Considerations Despite the potential threat of private currencies exerting a greater influence on the economy or ‘digital dollarisation’ of some other CBDC instead of the native country’s there are a plethora of concerns which need to be addressed before a CBDC can be implemented. Security Concerns The technology which will act as the substrate of the CBDC is still unclear. Since the CBDC would be issued by the Central Bank itself, it has a colossal duty of ensuring that the CBDC remains secure from any form of cyberattacks. Any security breach with respect to CBDC besides from tarnishing the reputation of the Central Bank and stifling further growth and permeation of the CBDC, can also lead to an economic crisis for the country, thus making the technology extremely sensitive and high risk in nature. The Central Bank would have to go above and beyond to establish a security infrastructure for the CBDC before it is implemented and ensure that technology which will as the foundation of the CBDC is immune to any form of digital security breach, hacking or malware attacks. At this juncture it is important to emphasise that even if a CBDC implemented with the DLT as its base which is considered a secure technology when it comes to protection cyber-attacks (Frankenfield, 2021), would not be able to offer the same level of protection because the ledger would be centralised and be controlled by the Central Bank. A decentralised ledger is usually protected from cyberattacks because it has thousands or maybe millions of nodes acting as servers where the ledger has been replicated and the hackers have to hack 51% of those servers to make any changes to the transactions recorded on the ledger (Frankenfield, 2022). But in the case of a centralised ledger the hackers would just have to take control of a few servers and the entire reserve of CBDC would be at their disposal. Hence, a novel solution would have to be figured out with respect to the above solution. Data Privacy Concerns Data Privacy is another important metric which the Central Bank would have to clarify on in relation to CBDC. Since CBDC would be a digital form of currency no matter how, when or on which platform it is spent, it will always leave a digital print on the internet. So, any transaction done with a CBDC would inherently be traceable. It is clear that due to practices like money laundering and terrorism financing an anonymous CBDC is something that no Central Bank would be amenable, in a similar manner the common public might not be amenable to a CBDC which is traceable at all times. A survey conducted over three months on a ‘digital euro’ has found that a majority of participants spread around Europe preferred an offline privacy-oriented solution over an online solution with implications for anonymity and privacy (Ledger Insights, 2021). Sufficient safeguards should be introduced against such concerns ensuring that the data of the citizens collected is only used for the legitimate purpose it is being collected for (Purpose Limitation) and is stored only for the period necessary for processing (Storage Limitation). Adding to privacy concerns is the assumption that if the use of CBDC becomes widespread in an economy the Government might be able to abuse this system similar to that of ‘Social Credit’ system in China and deny you the right to use the CBDC in your possession, the Central Bank should also guarantee regulation against such practices (Kobie, 2019). Technological Literacy Technological Literacy can prove to be a major barrier for the adoption of CBDC. In developing countries where the population struggles with financial and technical literacy, to secure the success of retail CBDC the Central Bank would have to come up with an interface which is simple enough for everyone to access to it. In India where digital transactions have seen a significant due to the impressive implementation of UPI technology, cash still remains the prevailing medium of transaction (Reserve Bank of India, 2021). Thus, ease of use and awareness in relation to the technology remain crucial factors which need to be looked into because if the technology is not made accessible, the general populace will still be strongly inclined to use cash instead because it is the age old, trusted alternative. Commercial Bank Disintermediation Assuming that the costs of maintaining and transacting in CBDC is lower than the services provided commercial banks, this would spur a large movement from bank deposits to CBDC which will be maintained by Central Banks this would lead to a cash crunch for commercial where they would have to provide incentives to retain their customers. Commercial banks earn significant revenue from facilitating payments and if the Central Bank were to offer cheaper payments alternative via the medium of CBDC it would lead to further reduction in commercial bank profitability (Wadsworth, 2018). To remedy this commercial bank might take certain steps such as increasing the interest rates on their deposits on investing in high yield but risky assets putting more stress on their balance sheets (Wadsworth, 2018). This could significantly worsen the financial stability in an economy, which is why such structural considerations need to be kept in mind while considering the issuance of CBDC. In addition to this depositors might convert their deposits into CBDC if they become aware of a bank being under stress and this might to practically unstoppable ‘digital bank runs’. This change in role of the Central Bank from an ombudsman to that a competitor of commercial banks can have grave consequences for the entirety of banking system, which is why a hybrid system needs to be worked out, wherein significant safeguards are envisaged for commercial banks from the spill over effects of CBDC and they are also able to profits from the adoption of this technology. Monetary Policy Through CBDC the Central Bank can pass through the effects of monetary policy via individual CBDC holders. However, if the government wants the CBDC to effect monetary policy they would have to relax the assumption that a currency can’t be interest bearing (Wadsworth, 2018). The complications don’t just end there in countries with high inflation rates, they may choose to convert their cash into CBDC of countries with low inflation rates, such large capital movements via the medium of CBDC can greatly influence exchange rates and affect asset prices which also be needs to take into consideration (BIS, 2018). Likewise, in times of crisis if the interest rates on CBDC are higher than interest being offered by banks on deposits this can lead to a liquidity crisis for banks because CBDC would serve as a better store of value (BIS 2018). If the demand for CBDC is high the Central Bank might have to invest lower quality assets so that it could have a larger balance sheet to support the issuance of CBDC. All of this could worsen the financial stability of an economy which begs the question whether instruments like CBDC should be used to regulate monetary policy in the first place, when such tasks are already being conducted through traditional tools such as repo rate, open market operations, discount rate, cash reserve ratio etc. Conclusion CBDC with its properties like seamless peer to peer transfer of funds, cross border transfers, disintermediation and shift from paper leading to reduction of costs surely presents a lot of benefits and can be evidently touted as the next step for the advancements of nation’s economy. The fact that over 60 countries are researching on its implementation clearly indicates that they want to cash in on the first movers’ advantage and salvage the benefits which come with ‘digital dollarisation’ of their respective currencies. Nonetheless, owing to the disruptive nature of this technology, its scale of implementation, the external effects it might have, the ambiguities surrounding which have been discussed in the aforementioned section of this article, it is best advised to tread with caution. Any economy would only be able to reap the benefits of its CBDC if it’s able to navigate through the externalities which it will cause while interacting with a numerous amount of diverse economic participants.

The Information Technology Act, 2000 has been in force for over 20 years. The legal instrument governs the use of electronic documents and digital transactions in the country. The act aimed to provide legal recognition for electronic documents and ensure the security and privacy of digital information. The law has had several key provisions, including the establishment of the Controller of Certifying Authorities (CCA) to regulate digital signatures, the introduction of electronic contracts and digital signatures as legally binding documents, and the creation of an appellate body for cybercrime cases. At the time, the IT Act was considered a significant step forward in India's digital transformation. It created a legal framework for e-commerce, e-governance, and other digital activities, and paved the way for the growth of India's tech industry. However, over the years, the IT Act has become increasingly outdated and inadequate in addressing the challenges and opportunities presented by the rapidly evolving digital landscape. New technologies such as artificial intelligence, blockchain, and the internet of things have emerged, and cyber threats have become more sophisticated and pervasive. To address these issues and provide a more comprehensive framework for India's digital future, the government has proposed the Digital India Act. The proposed legislation seeks to create a new regulatory structure for emerging technologies and strengthen cybersecurity measures. It also aims to promote the development of a digital ecosystem that fosters innovation, entrepreneurship, and inclusive growth. However, one has to reckon the fact that regulations and statutes work in sync with the economies they are used to govern. In the case of the IT Act and even the Digital India Act, it could be understood that the role of technology co-operation has been key to India's seemingly huge advances, both in regulatory governance and information economics. This explains the necessity of the US-India Strategic Partnership on Information, Communication and Emerging Technologies (ICETs) and its needed elevation in early 2023. Thus, India's relationship with the United States has been important to shape its mettle as a technology power. In this article, I have explored how the ICET partnership and the upcoming Digital India Act would shape India's technology governance avenues. Confronting Horizons of Technology 2.0 and Technology 3.0 Together The proposed Digital India Act represents a critical milestone in India's digital journey as the world grapples with the growing power and influence of Big Tech companies such as Google, Facebook, Amazon, and Apple. These companies have amassed vast amounts of data and are using it to shape user behaviour, influence political outcomes, and dominate markets. The Digital India Act is aimed to address the challenges posed by these Big Tech companies by introducing measures to promote competition and protect user privacy with unwavering determination. Moreover, the Digital India Act aims to ensure a level playing field for all players in the digital ecosystem, including startups and small and medium-sized enterprises (SMEs). Now, what one can understand is that it is these big technology companies whose actions in corporate governance, digital connectivity, intellectual property rights and business ethics, have led governments across the world to build their own regulations and standards, not to just hold them to account, but also estimate how they can develop better regulatory infrastructure keeping up with the changes that ICETs undergo. To be fair, the European Union came up with the General Data Protection Regulation and then still is deliberating among countries and stakeholders about the impact of the proposed Artificial Intelligence Act. Despite these regulations being sophisticated and too specific on civil liability, digital rights and market economics, they are maximalist in nature. Similar concerns were raised by the US Chamber of Commerce. Read Regulating the Big Tech: Legal Workability & Dysfunction in Oversight Measures There are other issues which exist as well. Even when we analyse the state of regulation of big technology companies in the United States, the multi-sector impact that big tech companies may produce remains to be properly assessed. Alexander Jones explains this problem by taking transparency as a regulatory expectation in an article for International Banker. Jones argues that while authorities may impose requirements of disclosure and reporting, they may not be that effective due to the following reasons: cross-sectoral and cross-border nature of big tech activities; centrality of data flows and cutting-edge technology within the digital-platform ecosystem; large number and variety of entities within big tech groups, arranged in complex, layered organisational structures, making it challenging for financial authorities to understand their inner workings deeply. In addition, the institutions involved in making these technology products, systems and services are capable in creating complicated and inexplicable derivatives of the product/service originally provided which further complicates things when rights and restrictions of use related to proprietary information are adjudicated. In fact, these sub-sets, sub-products, derivatives and other possible knock-offs or modulations drive the trajectory of the Web2 and Web3 industries. There are certain Web3 products and solutions which on their own fail (like Metaverse), but their concept is used in the existing Web2 paradigms, quite interestingly. Spatial commerce by Shopify is one such example. These issues, in my view should be dealt by the proposed Digital India Act with a soft-touch regulatory outlook, which is suggested for a digital markets law subject to discussion through the Competition Commission of India. Read ChatGPT & the Problem with Derivatives as Solutions The Proposed Digital India Act as of March 2023 A draft proposal of the Digital India Act, not containing a draft of the Act itself was released. The presentation is discussion-based and explains what issues are necessary to be covered as a starter. Here is a representation of the points of focus with respect to the Digital India Act: Now, this Act is well-expanded and all-comprehensive if we look at its policy and legal positions. The Act is a part of the cyber law infrastructure that the Government of India intends to build up. This would for sure require a Digital Data Protection Act and some key amendments in our telecom regulations (I propose), the Competition Act, 2002 and the Indian Penal Code, 1860. It would also require to develop a Digital Markets Law which consists of a sector-centric regulator under the Competition Commission of India. We have to also consider the Draft Telecom Bill which is subject to public comments and consultations. Strengthening digital public infrastructure and Government-to-Customer Engagement (G2C) is a quite interesting thing to look out for. Then, developing an adjudicatory mechanism is an appreciable move, which focuses to develop a unified cyber jurisprudence. Since cyberspace is the basis for the digital world or the information economy, the approach seems quite clear. The Open Internet as per the Digital India Act I find the way Open Internet is categorised interesting. Let us unfold how Open Internet is categorised and further elaborated upon. So, the first category - Choice is important. It reflects the right to choose and use throughout cyberspace, laying the basis of an open internet as per the Act. Competition, the second category is in sync with Choice where Online Diversity may be related to the equality of opportunity one may get in digital opportunities, discourses and systems. That may also be related with the digital rights that this Act would provide. That leads us to Fair Market Access and Ease of Doing Business & Compliance. There is nothing new, but a clear categorisation was required in Indian law, which this Act may achieve for good. Whole-of-Government Response and Digital Public Infrastructure It is an imperative to realise that technology governance can be categorised into 3 folds of public interest and policy concern: Digital Public Infrastructure Regulatory Institutions Judicial Institutions & Dispute Resolution Mechanisms As a starting point, the proposal seems clear that a Whole-of-Government Response would be taken as the key element of this Act's approach of technology governance. As the proposal states: Whole-of-Government Response for a unified, coordinated, efficient and responsive governance architecture including an effective appropriate government structure, a dedicated inquiry agency and a specialised Dispute resolution/ adjudication framework It means that when any technology or data-related issues could come up, the Digital Public Infrastructure backed by a government structure and a dedicated inquiry agency would be on the run to help aggrieved parties. It is also appreciative that a dispute resolution & adjudication framework would be decided in the Act. This itself explains that the Government's focus on shaping technology governance is comprehensive. Standards for ownership of Anonymised Personal Data This is also one of the most important areas of concern, which the Act may cover, apart from disclosure norms. It would be intriguing to seek how the Government would try to determine ownership standards for Data Intermediaries. There is another concern which may help in shaping Ownership Standards - the Safe Harbour Principle and having different kinds of intermediaries. The yellow portions in Figure 3 reflect how the rights and liabilities of different intermediaries sometimes may intersect such that even the safe harbour principles applied in the contexts of A, B and C may also be in conflict. Now, a safe harbour clause inserted in any legal instrument implies certain context-based rights on the use and platforming of third party data and information. Imagine how complicated it could get, from a legal perspective where rights, liabilities and responsibilities of 3 intermediaries, for example could get in conflict with one another, both respectively and as a whole. Taking this into consideration, the Government of India, in recommendation, create principles of defining how certain product or service use cases lead to companies gaining the status of intermediaries and what kinds of intermediaries may be relevant or not. It may seem a complex question to answer at first. However, a complex adaptive method could be adopted to interpret and define such things by focusing on the genealogy and economics of innovation in such technology products and services. That makes the picture way clearer. Maybe, this Act would address this issue broadly. That would help in designating classes of intermediaries, both which are made in the past, and those which could be made in the future. Conclusion: the ICET Partnership and its Impact The fact that the Act is aimed to be made all-comprehensive explains how important the US-India Strategic Partnership on ICETs is. Most importantly, here are the points of critical importance from the Fact Sheet by the White House on the Strategic Partnership on ICETs, when it comes to the Digital India Act: Drawing from global efforts to develop common standards and benchmarks for trustworthy AI through coordinating on the development of consensus, multi-stakeholder standards, ensuring that these standards and benchmarks are aligned with democratic values. Launching a public-private dialogue on telecommunications and regulations. Advancing cooperation on research and development in 5G and 6G, facilitating deployment and adoption of Open RAN in India, and fostering global economies of scale within the sector. Let's take these points into consideration. Now, India's technology partnership with both the United States and the European Union have different meanings and purposes. With Europe, India aims to bridge gaps on attaining sophisticated inter-regulatory channels for digital connectivity. With the United States, the focus is on innovation and economic activities to bridge gaps on competition law matters. The reason is that India's competition law approach is tilting to incline with the US approach, from a market point of view. Europe and China's separate maximalist approaches of technology regulation (and even market regulation) could enable the United States and India to become significant technology regulators and enhance their regulatory sovereignty differently. Both the countries are addressing tech regulation dilemmas and even competition law issues as technology sovereignty is becoming essential day by day. The difference is that the United States is a long-run player in this which is not even able to take calculated decisions on regulating and banning Tiktok and related apps and companies. India, however, has developed a much clear precedent by banning Tiktok and as an emerging economy, it has a lot more leverage as compared to the US to shape market and tech regulations with a unique rules-based approach. The way the Department of Justice and the Federal Trade Commission in the US have conflicting approaches to antitrust is not faced in India, similar to how banks and stock markets are regulated in the US, considering the crisis unfolded due to the fall of FTX and the Sillicon Valley Bank. Indian regulators in finance, market and tech have been more conscious of such realities and while the technology partnership in multiple folds is modifying its embodiment amidst the fears of recession in the US, the India-US partnership has an economic edge over other regulatory players to act differently. This is where the Digital India Act become a globally relevant instrument and even help the Global South countries to develop their own regulatory standards comprehensively. While the US is betting on dealing with the risks at its best, even by learning from Indian regulators in certain aspects, India has a much open ground to incentivise the best regulatory environment for investors, start-ups and innovators under the Act.