SWEDEN Law and Practice Contributed by: Niclas Rockborn, Rikard Sundstedt and Robin Entenza, Gernandt & Danielsson
or use of cryptographic techniques can be evaluated as tools and means to facilitate GDPR compliance in blockchain environments where modifying or delet- ing data is typically impossible. The draft guidelines also emphasise more generally that technical impos- sibility cannot be invoked to justify non-compliance with GDPR requirements and highlight the importance of conducting a data protection impact assessment (DPIA) before implementing blockchain-based pro- cessing of personal data. 1.1.4 Smart Contracts Smart Contracts – Enforceability There are no specific laws or judicial decisions addressing the legal enforceability of smart contracts. The Swedish law on the formation of contracts is tech- nology-neutral and therefore does not preclude smart contracts from constituting valid agreements between the parties that use them. In this regard, two cases may be distinguished. In the first case, parties agree “off-chain” to use a particular smart contract as a mode of delivery when executing an obligation that has been agreed “off- chain” (eg, an interest payment) on a particular date that is automatically calculated and executed by the smart contract where the underlying right to the pay- ment is documented in a loan agreement “off-chain”. The validity of the performance of an obligation is within the freedom of contract of the parties and will generally be legally binding. In the second case, the parties do not have a pre- existing relationship that has been agreed “off-chain” but rather use the smart contract as their only mode of communicating and exchanging performances. Under Swedish law, a contract may be entered into between parties through action, with the textbook example of a car park user being bound by the terms of the parking garage by parking in the garage (as long as the terms are available to the car park user). It is likely that the same reasoning can be applied to a contract being entered into through the use of a smart contract. It is not the smart contract itself that constitutes the agreement. An agreement between two parties is a legal concept of an abstract nature that in turn can be manifested and documented (eg, through a writ-
ten contract or computer code in a smart contract), but the manifestation does not necessarily reflect the binding abstract agreement between the parties. However, it is often difficult to prove that the content of an agreement differs from its physical manifestation. Swedish law on the formation of contracts also allows for the altering of contracts on the grounds of their being unconscionable (especially in relation to con- sumers vis-à-vis businesses) or because the forma- tion of the contract was invalid due to fraud, usury or duress, for example. The manifested obligations and any performance of a smart contract can therefore potentially be challenged in court on the grounds of the agreement being unfair or invalid. 1.1.5 Industry and Trade Bodies There are a few industry organisations active on the Swedish blockchain market with the aim of publish- ing reports, engaging with regulators, enabling net- working and providing a forum for innovation. These include Blockchain Sweden and the Swedish Block- chain Association. There are no privately governed organisations with judicial or semi-judicial powers in the blockchain field. 1.2 Crypto-Assets 1.2.1 Property Considerations Crypto-assets are recognised as property under Swedish law and can be owned and transferred under generally applicable rules. Swedish law does not require that legal validity of intangibles be explicitly set out in statute, and the legal protections afforded to other forms of intangibles also apply to crypto-assets. No bespoke formalities exist for establishing or exer- cising ownership of crypto-assets. There are two ways owned blockchain-based digital assets can be transferred, these being: • finalisation of a transfer between the parties to the transfer; and • finalisation and validity of transfer of ownership for purposes of rights in rem. General contract law principles apply between the par- ties to a transfer of blockchain-based assets, meaning
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