For centuries, private international law has sought to answer a fundamental question: which law should apply when a legal relationship is connected with more than one State?
The traditional answer has been built around territorial connecting factors: the domicile of the parties, the place where the contract was concluded, the place where an obligation is performed, the location of an asset, or the place where damage occurs.
This system continues to make sense in an economy built around people, companies and assets that can be territorially located.
But the Internet has introduced a new difficulty.
An increasing number of legal relationships are not simply connected with several States. There are relationships that arise, develop, are performed and produce their effects primarily within the Internet.
Bitcoin is probably the clearest example.
A bitcoin transaction may take place between two people located in different countries, using a globally distributed network, without a central server, without an entity managing the ledger and without any territory in which the asset can naturally be said to be located.
Where, legally, is that bitcoin?
The question itself may be wrongly framed.
From Conflicts Between Territories to Conflicts Between Systems
Private international law was fundamentally developed to resolve conflicts between territorial legal systems.
A transaction could be connected with Spain, France or the United States, and it was necessary to determine which courts had jurisdiction and which law should apply.
The Internet introduces a different reality.
Some digital rights exist within technological systems that operate independently of national borders.
A public blockchain does not end at the French border and begin again when it enters Germany. Its rules operate simultaneously across all nodes in the network.
For this reason, attempting to locate certain digital relationships using exclusively geographical criteria may lead to artificial results.
The Hague Conference on Private International Law (HCCH) has itself been examining this problem through its Digital Economy Project. The matters under consideration include decentralisation, distributed ledger technologies, asset tokenisation, digital currencies, digital platforms, artificial intelligence, automated contracting and decentralised autonomous organisations.
The underlying issue is clear: traditional territorial connecting factors begin to encounter difficulties when the subject matter of the legal relationship is, by its very nature, decentralised and global.
The Problem of Locating What Has No Natural Location
Consider a token issued on a public blockchain.
We can attempt to identify different territorial connections:
- the domicile of the issuer;
- the domicile of the holder;
- the residence of the developer;
- the location of certain nodes;
- the location of a trading platform;
- the country from which a wallet is accessed.
But none of these connections necessarily coincides with the place where the asset is legally “located”.
In some cases, quite simply, the asset has no natural territorial location.
This difficulty is already being recognised by international institutions.
The UNIDROIT Principles on Digital Assets and Private Law, adopted in 2023, represent one of the most significant developments in this area. Principle 5 specifically addresses the determination of the law applicable to rights in digital assets.
The solution is particularly significant because it gives considerable weight to party autonomy and contemplates that the applicable law may be specified in the digital asset itself or in the system in which that asset is recorded.
This represents an important conceptual shift.
The connecting factor begins to move from territory towards the digital architecture of the legal relationship itself.
From Lex Loci to Digital Architecture
Traditional private international law looks for geographical connections.
The digital economy requires us to consider technological connections as well.
In certain decentralised systems, relevant elements may include the network on which the asset exists, the rules of the protocol, the terms incorporated into the smart contract, the governance of the system, the law chosen by its participants, or the dispute resolution mechanism incorporated into the project.
This does not mean that State law disappears.
It means that between State law and the legal relationship, a new layer emerges: the digital infrastructure within which the right exists and can be exercised.
This is where we can begin to speak of an Internet Jurisdiction.
What Would an Internet Jurisdiction Be?
Internet Jurisdiction should not necessarily be understood as a new State or as an independent territory.
It would be more accurate to understand it as a functional legal space for relationships that exist essentially within global digital infrastructures.
Four elements could coexist within this space.
First, the technical rules of the system.
Second, the private autonomy of its participants.
Third, specialised dispute resolution mechanisms.
And fourth, State legal systems, which would continue to intervene particularly in matters of public policy, consumer protection, financial regulation, insolvency, taxation, or enforcement against assets located outside the network.
The objective would therefore not be to replace the State.
It would be to legally recognise a reality that already exists technologically.
Arbitration as a Bridge
There is also a legal institution particularly well suited to connecting these two worlds: international arbitration.
Arbitration allows the parties to determine in advance the mechanism through which their disputes will be resolved, the applicable law, the language, the seat and the procedural rules.
In a blockchain-based relationship, an additional dimension can be introduced: the arbitral decision can be connected to technical mechanisms capable of producing certain effects within the digital infrastructure itself.
An arbitrator can legally determine who is entitled to an asset.
A legal oracle can transmit that decision to the system.
And a smart contract technically designed for that purpose can execute certain consequences previously accepted by the parties.
A connection is then created between two worlds:
legal adjudication + digital enforcement.
Outside the network, the arbitral decision can continue to rely on the traditional mechanisms for recognition and enforcement provided by national legal systems and international instruments.
Within the network, certain effects can be executed through the technological architecture itself.
From Private International Law to International Digital Law
Private international law is not going to disappear.
On the contrary.
It will probably be one of the legal disciplines that will have to evolve the most over the coming decades.
But its function may change.
For centuries, it has primarily answered one question:
which State is legally connected with this relationship?
In certain digital environments, we may need to ask an earlier question:
does this relationship essentially belong to a territory or to a global digital infrastructure?
Only then can we determine which State law should intervene, what degree of autonomy should be afforded to participants, and which mechanism should resolve disputes.
Bitcoin, public blockchains, tokens, DAOs and future economic systems operated by artificial intelligence agents are making it increasingly difficult to regard the Internet simply as a means of communication.
The Internet is also becoming a space in which rights arise, are transferred and are enforced.
The next step in private international law may consist precisely in recognising this reality.
Not abandoning territorial jurisdiction.
Adding a new dimension.
Internet Jurisdiction.
