Chinese Court Sets Legal Precedent for Admitting Blockchain Data

The Hangzhou Internet Court which has been hearing cases since last August was meant to deal with legal disputes in e-commerce, digital copyrights and other internet-based contracts in China.
The Hangzhou Internet Court which has been hearing cases since last August was meant to deal with legal disputes in e-commerce, digital copyrights and other internet-based contracts in China.

Hong Kong, CHINA – Hangzhou, a city in China is home to many things, but is perhaps most synonymous with tech giant Alibaba, which is headquartered in the sprawling urban jungle. So it should therefore come as no surprise that the Hangzhou Internet Court (the court’s genuine name), held in a judgment on June 29, evidence that was on the blockchain was admissible in court and ultimately proved the defendant’s innocence. According to the judgement, which was translated from Chinese,

“This court is of the opinion that when the issue at hand involves blockchain technology, an open and neutral attitude must be adopted.”

At the Hangzhou Internet Court, parties need not even be physically present to have their cases heard.
At the Hangzhou Internet Court, parties need not even be physically present to have their cases heard.

The judgment is consistent with Beijing’s push to promote blockchain technology, which no less than Chinese President Xi Jinping has identified as a key part of China’s “economic revolution.” The case before the Hangzhou Internet Court involved accusations of copyright theft by the plaintiff, with the defendant producing evidence from the Bitcoin and FACTOM blockchains to demonstrate that no such theft could have occurred. Apparently, the defendant had hashed the relevant data onto the relevant chains and proved by way of timestamp that infringement would have been impossible. Data on the blockchain is timestamped and chronological. And because the blockchain provides a decentralized and immutable ledger, a ledger that is tamper-proof, once data is entered onto it, it forms a permanent record. In a country where intellectual property rights are evidenced more in their violation than their protection, the judgement by the Hangzhou Internet Court in what is arguably considered the Silicon Valley of China should be indicative of a newfound respect for the blockchain and its ability to not only protect intellectual property rights, but to serve as admissible evidence in court in the event of dispute as to those rights.

A judge at the Hangzhou Internet Court hears a case, the court deals only in digital disputes.
A judge at the Hangzhou Internet Court hears a case, the court deals only in digital disputes.

But even beyond the intellectual property rights application of the blockchain, the judgment also stated,

“We (the court) should not reject or impose higher standards simply because it involves new technology.”

Arguably, the blockchain is the highest standard for record, something which China has not only embraced, but made a cornerstone for their economic development. The case out of the Hangzhou Internet Court, in a country not known for setting judicial precedent for other countries to follow, also marks the first time that blockchain evidence has been called upon and admitted in a court of law. The judgment has the potential for other jurisdictions such as South Korea, Japan and Singapore to follow. With South Korea and Japan civil law countries (countries where the law is run through a civil code) and judgments are not precedent setting in the sense that judges are not bound to follow the same ruling and Singapore the only common law country (where a previous judgment on similar facts can be considered precedent setting and judges, especially at lower courts are bound to follow the previous judgements), blockchain evidence may seep into these judiciaries. To be sure, the ruling by the Hangzhou Internet Court will make it extremely attractive for Chinese creators of intellectual property to log it on the blockchain as it has been shown to be an extremely effective tool to proof ownership of such property.