The purpose of this publication is to set out the main differences between the soft law instruments and reports on digital assets of the European Law Institute, the UK Law Commission and UNIDROIT. In relation to the soft law on digital assets, several adaptations of the content of the ELI Principles on the Use of Digital Assets as Security should be noted. The ELI Principles understand a digital asset to be any record or representation of value that fulfills the following criteria: it is exclusively stored, displayed and administered electronically, on or through a virtual platform or database, including where it is a record or representation of a real-world, tradeable asset, without the need of immediate possession of the digital asset through an account with an intermediary; it is capable of being subject to a right of control, as well as to the exercise of acts of management in relation to enjoyment or use, regardless of the holding regime; and it is capable of being subject to transfer, including inter vivos and mortis causa acts, which require assets of a proprietary nature. In addition to the acquisition and thus the power of disposal of the digital heritage asset, we shall also speak of a digital possession that materialises remote control by its owner, i.e. the power of exclusion, and that sets aside as a notion its apprehension or licence of use.
The Law Commission of England and Wales, in line with other reports issued with a view to reforming its legislation, published the report Digital Assets: Final report on 28 June 20231. With regard to the legal nature of digital assets, it confirms that they should have a proprietary nature or content –in line with the ELI– as personal property rights or individually owned property rights, as opposed to community property. The final recommendations of this report refer to proprietary digital assets and do not affect the general term of digital asset, which it describes as “extremely broad“; this general term expressly includes, among others, digital files or digital records, which UNIDROIT considers to be digital assets.
Regarding their legal treatment, this report makes a number of recommendations, such as the creation of a third category of things, distinct from things in possession, such as a car, and things in action, such as a payment card, given that digital assets can be linked to personal property rights in relation to them, with two practical limits indicated by the experts: on the one hand, respect for and adaptation to existing law, and, on the other hand, avoiding setting strict limits for this third category of goods in which to include digital assets, to the effect that they do not need to be digital in any case, in order to include milk quotas or gas emission permits.
This third category of goods describes digital assets that constitute goods in which personal property rights can be regulated, as distinct from things in possession and things in action. To this end, the asset assigned to this third category must meet three characteristics: it must be composed of electronically represented data; it must exist independently of its owner or legal system, which alludes to its legal-real nature and erga omnes effects; and it must be rivalrous, specifically, susceptible of being used or consumed to the exclusion of third parties, which materialises the power of exclusion. This last criterion makes it possible to differentiate it from data, whose use is not exclusive, nor is there a power to exclude third parties. As for the powers inherent to this third category of goods, they refer to control and transfers. As regards control, they are divided between factual control or remote control of possession of the digital asset, and legal control or the legal consequences of such possession, which will be different for each digital asset, depending on which of the three categories of goods it falls into.
Finally, UNIDROIT has approved the Principles, Commentary and Legislative Guidance on Digital Assets and Private Law or DAPL, as model rules of uniform law. This soft law instrument provides for a very broad concept of digital asset, designed for international commercial transactions, as it states that a file hosted on a platform can be a digital asset, such as a text document hosted on a cloud access platform; this does not give it the proprietary nature necessary for its transmission inter vivos or mortis causa. In particular, its testamentary disposition varies according to its patrimoniality: patrimonial digital assets are part of the estate, in this case digital inheritance, whereas extra-patrimonial digital assets, such as data hosted on platforms, can only be ordered through a testamentary transfer.
— Cristina Argelich Comelles, Assistant Professor of Civil Law, accredited as Contratado Doctor, Universidad Autónoma de Madrid.
How to cite this post: Argelich Comelles, C., The European Law Institute and UK Law Commission’s Proprietary Digital Assets v. UNIDROIT’, La clave de BAES, 24 de enero de 2024, https://www.baeslegalcripto.eu/legalcripto/en/the-european-law-institute-and-uk-law-commissions-proprietary-digital-assets-v-unidroit-por-cristina-argelich-comelles/
This work is licensed under CC BY-NC-SA 4.0
- LAW COMMISSION, Digital Assets: Final Report, 2023, pp. 1-304, [online] <https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2023/06/Final-digital-assets-report-FOR-WEBSITE-2.pdf>. [Consulted on 20/10/2023.] ↩︎
